My Anti-bankruptcy Advise to JC Penney ( you could share yours as well)
Did you hear about the 114 year old store filing for bankruptcy? Yes, that company is JC Penney, the department store just filed for bankruptcy. When a company files for bankruptcy, it doesn’t mean the company is shutting down activities completely. Bankruptcy are of two types, one requires the company to shut down its activities completely and sell all asset sending the one it owes the bank to the bank while the rest goes to shareholders while the other bankruptcy is about a company setting out new strategy after going into debt. At this point, the company finds a way to pay its debt and come out stronger. The latter is the case of JC Penney which is a chapter 11 bankruptcy and not a chapter 7 bankruptcy.
What Can JC Penney Do?
JC penney is in over $4 billion debt. And the court gave until July 15th to figure out the restructuring plan. The company is into real estate worth over $1 billion with the company having around 850 physical stores and other buildings. The company stores is what is having problem and not the real estate but this time, the company handles both the buildings and the store.
Why have a company own both the real estate and the retail when one can own the real estate while the other is in charge of the retailing. It is advisable for JC Penny to split its company thereby allowing the real estate to stand on its own while leaving the retail store on its own. The company can have JC Penney real estate and JC Penney which is in charge of the retailing. Which means the retail store will pay rent to the real estate regularly.
Why will this be advantageous?
If the retail company goes bankrupt completely, they really have nothing to sell except for its products. Since the retail store doesn’t own any real estate, then the store can’t be forced to sell what doesn’t belong to them.
JC Penney stores can now sell shares in the stock market to pay off debt while the real estate just lease their building out to people who pay rent and with this, they have the money to restructure their business.
Conclusion
If the company cannot find a solution before on the 15th of July, the company will be forced to liquidation. Currently, they are shutting down some of their stores and they are laying off a lot of workers. Well, that could be seen as a good start to getting the company out of bankruptcy.
@tipu curate
Upvoted 👌 (Mana: 12/20 - need recharge?)
This is a good idea to the company I wish the company will get to read this because this is one thing that should have been done from the beginning to prevent bankruptcy in the first place.
I really hope they get to read it too.
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