JCPenney Is Engaged In An Ugly War With Investors Who Say It Has Already Defaulted
Daniel Goodman / Business InsiderMonths after speculation of a cash crisis at JCPenney, bond investors are accusing the company of defaulting on its debt.
Lawyers who say they represent half of the holders of a tranche of JCPenney bonds due in 2037 sent the company a letter alleging that it breached a bond agreement, Sapna Maheshwari at Bloomberg reported.
JCPenney has filed a lawsuit to combat the accusations and alleges in a separate statement that the investors "intended to create self-interested trading opportunities in the market."
The company's rebuttal complaint states that it has been exposed to “to imminent, irreparable harm,” and that the claims could put the company at risk of demands for payment on upwards of $2.8 billion.
Bond lawsuits aside, JCPenney's sales have declined considerably since CEO Ron Johnson took over a year ago.
JCPenney has struggled to find a concrete strategy or marketing plan, leaving customers confused. The company just laid off about 1,000 people.
There have been rumors of a cash crisis at JCPenney since at least November.
"JCPenney may have to raise capital or consider removing itself from the public markets (getting certainty of value for shareholders instead of staying public and hoping the turnaround brings to surface unrealized value)," Brian Sozzi, chief equities analyst at NBG Productions, said.
CFO Ken Hannah defended his company, saying that the claims are "completely without merit."
SEE ALSO: Here's All The Craziness That Happened At JCPenney Since Ron Johnson Announced His Turnaround Plan >