JCPenney filed for Chapter 11 bankruptcy protection. The retail company plans to close 30% of its locations. According to the company’s presentation with the Securities and Exchange Commission, they will close about 240 stores. Should these closings come through, the 846 stores will go down to 604 locations, causing a drop of net store sales from $9.2 billion to $7.5 billion.

According to Business Insider, the company planned to close stores in weaker malls. By doing this, they’d be increasing the share of locations in more substantial malls from 58 to 62%.

Reuters cited a JCPenney spokeswoman stating that the company is engaged in discussions with its lenders since mid-2019. This is to evaluate their options in strengthening their balance sheet and maximize financial flexibility.

By filing for Chapter 11 Bankruptcy Protection, they’ve secured time to restructure their debts. The company needs to make a $12 million payment on Wednesday, followed by a $105 million bond repayment due in June. They will also have to contend with about $300 million in annual interest. According to the regulatory filings, JCPenney will face more than $2 billion of debt maturing in 2023.

In March, the company already drew down $1.25 billion from its revolving credit line. They’ve been unsuccessful in persuading creditors earlier in restructuring and pushing out due dates on portions of their nearly $4 billion long-term debt.

Fitch Ratings Inc. predicts the company’s revenue to go down by 25% this year. They’ve predicted that the JCPenney’s earnings before interest, taxes, depreciation, and amortization will become “materially negative” to the tune of $400 million in 2020.

Investors are now worried as the company’s bonds in 2023 were swinging at a troubling amount of roughly 43 cents on the dollar this Tuesday. According to Refinitiv Eikon Data, this plunge indicates investor concerns about its ability to pay its debts.

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