An informal group of share owners — earlier given $250,000 to research its alternatives in the retailer’s bankruptcy — is pressing Judge David Jones to become an official committee. That would put J.C. Penney on the hook for the group’s legal and financial advisory costs, and give them more legitimacy during negotiations.
In court papers filed Wednesday, the group argues a liquidation of J.C. Penney would generate more than $8.4 billion, enough to pay off all creditors with some left over for shareholders. The company, according to the stockholders, has been “overly pessimistic” about its own value, especially in light of recently improved sales.
The request comes at a critical moment in the bankruptcy. J.C. Penney’s lawyers have said they’re nearing a deal to sell the company and preserve some 70,000 jobs, but have also more than once extended deadlines with lenders to come to a deal and left some stakeholders in the dark.
A J.C. Penney representative declined to comment on the equity committee motion.
Judge Jones is losing his patience — he ordered lawyers for the company, creditors and stockholders to meet Wednesday afternoon for a “frank discussion about the status of the case.” Jones previously chided rogue shareholders who have been writing letters to the court accusing J.C. Penney and its executives of malfeasance.
“The parties have reached the end of the Court’s patience,” the judge wrote. “Negotiating postures and egos will be put aside.”
The efforts of J.C. Penney’s long-term shareholders have been complicated by a horde of day traders looking to make a quick buck off the stock. The group’s attorney, Matthew Okin, last week said in a hearing the group is “trying to be very careful about what we say and how we say it” because its statements are seen as a way to push around the stock price in the short-term.
By Jeremy Hill.