A group of JCPenney Co. lenders criticized the way the company plans to parcel out proceeds from its proposed sale to two mall owners and a larger group of lenders that have been steering the retailer’s bankruptcy, <em>WSJ Pro Bankruptcy</em> reported. The dispute complicates Penney’s planned chapter 11 exit and highlights a conflict that predates its pandemic-driven bankruptcy filing in May. The smaller group of lenders, led by Aurelius Capital Management LP, said Penney’s proposed breakup would siphon away hundreds of millions of dollars from all of the company’s lenders and funnel the bulk of the money to a subset among them. The retailer should also be subject to a competitive bidding process, which doesn’t appear to be planned, according to papers filed Monday by the holdout lenders group in the U.S. Bankruptcy Court in Corpus Christi, Texas. Mall owners Simon Property Group Inc. and Brookfield Property Partners LP reached a tentative deal in September to buy Penney for $800 million in cash and debt, including the real estate behind most of the company’s stores, pulling it back from the brink of liquidation. The larger group of Penney lenders agreed to buy the remaining stores in return for forgiving some of Penney’s $5 billion in debt, and lease them to Simon and Brookfield.
