J.C Penny explores bankruptcy as hopes for recovery fade

The article I am writing about is “J.C Penny explores bankruptcy as hopes for recovery fade”, published on Reuters business news. This article interested me because it highlights the struggle that J.C Penny Co Inc is facing due to the current coronavirus crisis. There are also many other companies and organizations facing a similar situation across the globe. The company usually operates different department stores around the United States and Puerto Rico where it normally provides merchandise and services to various consumers via its department stores, the catalog department, and the internet too. However, the company has been forced to temporarily shut down its 850 stores in the U.S. The closure of the stores has affected the company’s income and made it impossible for the company to pay off its debt. The company has a longstanding debt which amounts close to $4 billion (Spector, 2020). The company is supposed to pay a $12 million debt by 22^nd April 2020, followed by a $105 million repayment by the end of June (Spector, 2020). Currently, the company is not in a position to meet the deadlines due to the closed stores.

The company managers are thinking about filing for bankruptcy protection because revenues are drying up. The managers are thinking that filing for the bankruptcy would help in reworking the company’s unsustainable finances as well as save money for the looming debt payments. The company’s value preposition is to strengthen private brands, become a global omnichannel retailer as well as to increase revenue per customer. The marketing relevance explored in this article is the ability to manage a crisis.  J.C Penny is faced by a financial crisis which the company should be able to manage or otherwise the company will collapse completely. The company also has annual interest expenses that will require attention. While the idea of filing for bankruptcy will might help the company address its debt, the managers should prioritize discussions with lenders to push the debts due dates without necessarily filing for bankruptcy. 

If I was the manager, I would ask the creditors for a breathing room via transactions that would help the company to work out the debt without necessarily filing for bankruptcy. I would also capitalize on the internet means of selling merchandise despite the limited number of customers. The company should also think about discussing with its lenders about various ways that can be applied to strengthen its balance sheet as well as maximize its financial flexibility. From this article, I have leant that a company’s debts can be a serious issue in times of crisis such as coronavirus. Hence, an organization should have well laid strategies to address its debt burdens.

 https://www.reuters.com/article/us-jc-penney-bankruptcy-exclusive/exclusive-jc-penney-explores-bankruptcy-as-hopes-for-recovery-fade-sources-idUSKCN21W34W