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After suffering a 25 percent annual sales decline, J.C. Penney yesterday ousted CEO Ron Johnson and replaced him with his predecessor, Myron E. Ullman III, Bloomberg News reported yesterday. Ullman faces several tough choices as he will have to decide whether to continue Johnson's strategy of turning the chain into a collection of boutiques or return to a more traditional department-store model. The Plano, Texas-based chain was so damaged under Johnson that Ullman will struggle to turn it around. On Feb. 27, J.C. Penney reported annual revenue dropped to $13 billion, the lowest since at least 1987. Johnson alienated the company's core customers by doing away with sales and promotions and only recently began trying to win them back by putting discounts front and center again.

In a sign of its dissatisfaction with the direction of the struggling company, the board of J.C. Penney gave its chief executive, Ron Johnson, a pay cut of almost 97 percent for 2012, to $1.9 million, according to a regulatory filing yesterday, the New York Times reported today. In addition, not a single top company executive received a cash bonus for the year. Since Johnson arrived in late 2011, J.C. Penney has wrestled with one problem after another. For fiscal 2012, J.C. Penney lost more than $4 billion in sales as traffic declined. Its stock now trades at $14.55, less than half of its price when Johnson’s appointment was announced in June 2011. It had $13 billion in sales for fiscal 2012, well below its competitors Macy’s and Kohl's.

The future of struggling U.S. retailer J.C. Penney is looking increasingly dire, says BMO Nesbitt Burns analyst Wayne Hood, who warns that there’s a chance it could be heading into bankruptcy over the next couple of years, the Toronto Globe and Mail reported today. J.C. Penney's fourth quarter showed a continued steep deterioration in its business since launching a turnaround strategy nearly a year ago, with same-store sales dropping by 32 percent. Wood sees four potential outcomes for the company over the next 12 to 24 months— and three of the four would be bearish. In the most bullish scenario, J.C. Penney would restore sales growth and maintain sufficient liquidity by throttling back capital expenditures while selling non-core assets. Wood's “base-case scenario” sees the company reversing the steep slide in comparable store sales to post modest sales growth of 0.9 per cent in fiscal 2014. That scenario also assumes capital spending cuts and the sale of non-core assets, but assumes the company will continue to post annual earnings per share losses over the next five years. The last two scenarios involve bankruptcy filings. One would be a voluntary chapter 11 bankruptcy that enables the company to become smaller and more profitable. The fourth, and most dire, outcome would see the company forced into an involuntary bankruptcy in the first or second quarter of fiscal 2014.

Several creditors of Commerce Corp. filed an involuntary bankruptcy petition against the Maryland-based distributor of lawn and garden supplies, the Baltimore Sun reported today. In the petition filed last week, five creditors claim they are owed a combined $1.73 million from the Curtis Bay distributor and want it placed in a chapter 7 liquidation. Commerce, founded by CEO Richard Lessans' family in the 1920s, has been under financial stress, and early last month notified the state it was laying off up to 70 employees.

J.C. Penney Co., facing a potential threat to its turnaround plans, has come out swinging after debt holders claimed it technically defaulted on a bond, Bloomberg News reported yesterday. The department store chain on Monday filed a lawsuit in Delaware Chancery Court seeking to block efforts by a group of bondholders to declare a default on 7.4 percent bonds due in 2037. The company also asked lawyers at Brown Rudnick LLP to identify the investors they represent. The Boston-based firm said in a letter to the company that it represents holders of more than half of the debt. The claim exposes J.C. Penney to “imminent, irreparable harm,” the Plano, Texas-based retailer said in the complaint.

TV star Paul Teutul Sr., founder of Orange County Choppers Holdings Inc., sought chapter 7 bankruptcy for his merchandising unit with plans to liquidate its assets, Bloomberg News reported on Friday. The family-run custom-built motorcycle company operated by Teutul and his son, Paul Jr., is based in Newburgh, N.Y. Its Hudson Valley Merchandising LLC listed $1.12 million in assets and $1.44 million in debts in papers filed in court on Thursday. The parent company did not file.

Two national restaurant chains that quietly filed for bankruptcy and tried to keep the news from their 1,400 employees caught the attention of the U.S. Trustee’s Office, which has ordered the company to notify them, the Wall Street Journal reported on Saturday. A representative from the U.S. Trustee’s Office instructed the owners of Garcia’s and Garfield’s restaurant chains to notify creditors, including many employees, that the chain’s two holding companies had filed for chapter 11 protection on Dec. 28. Both holding companies left out the names of the restaurants they operate throughout several hundred pages that were filed to the U.S. Bankruptcy Court in Oklahoma. But more detailed court papers, including a list of their lawsuits and trademarks, make it clear that the chains are Garcia’s Mexican restaurants and Garfield’s casual-dining restaurants.

Bankruptcy Judge Charles E. Rendlen III said he would convert Bakers Footwear Group Inc. chapter 11 case to a liquidation under chapter 7 now that the shoe retailer has launched going-out-of-business sales at all of its stores, Dow Jones DBR Small Cap reported today. The 88-year-old chain last week won permission to hold liquidation sales at its remaining 56 stores after seeing its reorganization plan collapse and a last-ditch sale effort fall apart. The company said that it was necessary to hand over control of its estate because it was administratively insolvent. The company, which had 216 stores nationwide when it sought chapter 11, has not had committed funding for its operations since Dec. 21, according to court papers. It has been unable to pay for things such as inventory purchases and professional fees, it said.

Handy Hardware Wholesale Inc., a dealer-owned wholesale group with more than 1,000 members in 14 states, filed for chapter 11 protection from its creditors, Bloomberg News reported on Friday. The company listed both assets and debt of $50 million to $100 million in chapter 11 documents filed on Friday. The company, based in Houston, was founded in 1961 by 13 independent hardware retailers in Houston. American Water Heater Co., owed $1.4 million, is listed as the largest creditor without collateral backing its claim.

Bakers Footwear Group Inc. won permission to liquidate its 56 remaining shoe stores, a ruling that essentially signifies the death of an 88-year-old chain that saw several attempts to stay in operation, Dow Jones DBR Small Cap reported today. Bankruptcy Judge Charles E. Rendlen III on Wednesday approved Bakers's request to launch a final round of going-out-of-business sales at locations spanning from New Jersey to California.