J.C. Penney?s Financial Woes Might Be Eased With a Debt Swap

August 7, 2019J.C. Penney Co. creditors are pushing for discussions on a possible debt swap that would give the company’s new managers more time to turn the struggling retailer around.Some of the department-store chain’s bondholders are seeking to rework a portion of its $4 billion of debt well ahead of their maturities in an effort to avoid the last-minute brinkmanship that contributed to the bankruptcies of Toys “R” Us Inc., Sears Holdings Corp., and Barneys New York Inc., according to people with knowledge of the matter.A possible deal could include swapping second-lien notes into higher-priority debt, giving creditors additional collateral, or compensating investors with higher coupon securities in exchange for extending maturities, said the people, who asked not to be identified discussing private negotiations. Kirkland & Ellis didn’t immediately return requests seeking comment.J.C. Penney is scheduled to report second-quarter earnings on Aug. 15, which likely limits its ability to engage in formal discussions at present.Investors holding J.C. Penney’s secured debt believe the Plano, Texas-based company has more room to maneuver than Sears, Toys “R” Us and Barneys did because it has $1.75 billion of liquidity available, and no meaningful bond and term-loan maturities until 2023, the people said.