Milbank partner Dennis Dunne, Practice Group Leader of the firm’s Financial Restructuring Group, was quoted in the Wall Street Journal’s article, “J.C. Penney Needs Quick Bankruptcy Exit to Avoid ‘Disastrous’ Result,” with comments from the first day of the company’s chapter 11 hearing before Judge Jones.
The retail chain is less likely to emerge from chapter 11 as a continuing business if it remains stuck in bankruptcy proceedings, noted the article. Over the past 15 years, the article explains, almost half of the 50+ retailers and supermarkets that have filed for chapter 11 have went out of business permanently.
Dunne, who is advising some of J.C. Penney’s senior lenders, commented in the first day of the hearing: the lenders “committed real capital to provide the company with some breathing room” by supporting a restructuring that would give them a controlling stake in the company. He noted: “A lot has to happen and a lot has to go right. We do think there is a path for renewal and reorganization, but the hard work starts now.”
“A reorganization that preserves Penney’s core business will maximize the company’s value,” he added.