JCPenney is being rescued by a tentative deal struck with its mall landlords

• JCPenney is being acquired by mall owners Simon Property Group and Brookfield Property Partners, lawyers said in bankruptcy court on Wednesday.
• The deal is still subject to approval by a bankruptcy court judge.
• JCPenney filed for Chapter 11 bankruptcy on May 15.

JCPenney is set to be acquired by a joint venture between mall owners Simon Property Group and Brookfield Property Partners, lawyers for the department store said in bankruptcy court Wednesday afternoon.

The transaction still needs to be approved by a judge in bankruptcy court, and competing bids could be evaluated in a court-supervised auction. Lawyers expect the transaction to be completed in October.

"I know we've had a few screaming matches, including earlier today, but we got there, and we're appreciative of all the hard work and know all the hard work that will go into this over the coming weeks," Kirkland & Ellis' Joshua Sussberg, who is representing JCPenney in the bankruptcy proceedings, said in a hearing on Wednesday.

If approved, the deal is expected to preserve the retailer's stores and more than 70,000 jobs, Sussberg said. Simon and Brookfield would pay about $300 million and take on about $500 million in debt.

Sussberg added that Wells Fargo said it would contribute an additional $2 billion in financing. A group of JCPenney's lenders will additionally take ownership of some stores and the company's distribution centers.

Three separate bidders — private-equity firm Sycamore Partners, Saks Fifth Avenue owner Hudson's Bay, and the joint bid of Simon and Brookfield — were reported to be in the running to acquire JCPenney out of bankruptcy. Those talks were held confidentially.

On August 31, lawyers for JCPenney said that talks with potential buyers had reached a "stalemate," and that the company's top lenders were putting together their own bid.

"There have been twists and turns," Sussberg said Wednesday. "But I think we were at a place now where we have significant momentum behind us. Simon, Brookfield, the lenders in the company, the creditors' committee, are all committed to moving this forward quickly and saving JCPenney as we know it."

Reuters was first to report that a deal had been struck for the department store chain after further discussions with Simon and Brookfield, which are landlords for a number of JCPenney stores.

JCPenney filed for Chapter 11 bankruptcy on May 15. In May, the company said it would have to close about 30% of its locations. It had about 850 stores at the time. The company has since announced 155 store closures.

This wouldn't be the first time Simon and Brookfield teamed up on an acquisition. Together with Authentic Brands Group, they previously bought Forever 21 and Aeropostale.