J.C. Penney Lenders Led by Aurelius Seek to Slow Property Sale

A group of creditors to J.C. Penney Co. is seeking to slow the sale of the bankrupt retailer’s real estate to another group of lenders, saying that it provides the buyers an undeserved windfall and reeks “of not only greed but abhorrent bad faith,” Bloomberg News reported. The objecting creditors, led by Aurelius Capital Management, say they submitted a $750 million competing bid for J.C. Penney’s properties that would provide $600 million more to the bankrupt estate and more evenly distribute proceeds among creditors. They’re asking Judge David Jones to order a separate process for the property sale to the so-called DIP lender group, while proceeding with the sale of retailer’s operations to its two biggest landlords. “The lure of a windfall has so clouded the DIP lender group’s judgment that its members are seeking value far in excess of their entitlements under the Bankruptcy Code,” lawyers for the dissenting creditors wrote in an objection submitted on Friday. J.C. Penney has been racing to wrap up the planned two-part sale of its assets as the crucial holiday season approaches. The retailer has said the deal will save more than 60,000 jobs. Under the agreement, J.C. Penney’s assets would be bought by a group of firms including H/2 Capital Partners that provided J.C. Penney with debtor-in-possession, or DIP, financing to keep it operating while in bankruptcy. The lender group would then sell the retail operations to mall landlords Simon Property Group Inc. and Brookfield Property Partners.