UNIT 7 LAW 301 PT.1 RESEARCH PAPER
docx
keyboard_arrow_up
School
American Military University *
*We aren’t endorsed by this school
Course
301
Subject
Law
Date
Jan 9, 2024
Type
docx
Pages
4
Uploaded by ProfessorRam11604
Course Research Paper
Business Bankruptcy
Beverly Baxter
Post University
LAW301-Bankruptcy Law and Practice
Professor: Vallillo
Assignment Due Date: October 17, 2022
Course Research Paper
The recent pandemic has impacted the economy, people, and businesses. These issues
with the coronavirus pandemic have led to many employees losing their jobs and businesses
having to file for bankruptcy. J.C. Penney was one of the many well-known companies that had
to seek relief by filing for Chapter 11 bankruptcy.
J.C. Penney first opened on 14 April 1902 in Kemmerer, WY, where their first store was
called, “The Golden Rule.” Over the decades to come, J.C. Penney became one of the largest
retailers in the U.S. with over 850 stores and almost 85,000 employees. After the pandemic hit,
J.C. Penney had a $105 million dollar debt payment, $300 million dollars of annual interest
expenses, and more than $2 billion of debt due in 2023. Furthermore, after J.C. Penney fought
for more finances from its creditors, it ended up not winning. The pandemic resulted in the
company drawing out of $1.25 billion dollars from its recovering credit line, which led to its
bankruptcy preparation.
J.C. Penney had a downfall from their first CEO Ron Johnson renovations he made
within the company. He received a lot of backlash from customers from his elimination of
coupon usage which decreased the company sales. He was later replaced by Chief Executive, Jill
Soltau who tried to salvage the issues Johnson created and bring the company focus back to an
affordable family company. “Before the pandemic, J.C. Penney hoped to persuade creditors to
give it more financial breathing room, as Soltau tried to forge a turnaround focused on the
company’s roots as a seller of affordable apparel for middle-class families.”
Course Research Paper
I agree with this outcome because when the pandemic hit, there were a lot of people who
suffered from job loss and businesses filing for bankruptcy to prevent themselves from larger
debt. Chapter 11, “
allows a debtor to sell some or all of its assets or propose a reorganization
plan that aims to resolve and satisfy enough creditors to re-emerge as a going concern.” Knowing
J.C. Penney has been in business for over 118 years as a popular store that many enjoy shopping
at. To lose everything they built and gained filing a Chapter 7 would have been a waste.
Knowing they have the capabilities within Chapter 11 to eventually satisfy its debt and continue
growing its company shows its care not only for its customers but also employees.
If a business is having financial issues rather, they are a multi-million-dollar company are
not. They should be allowed to discharge some or all their debts. Some companies fall on short
times due to economic issues, lack of growth, productivity, needing to reevaluate their business
module, etc. Over time, rather it’s chapter 7 or 11, it allows companies to start over or have an
organized plan to pay off their debts to continue their business. However, “The system makes the
best of a grim situation by imposing an orderly and open process that preserves value and
encourages negotiation.” “At the most fundamental level, the bankruptcy code creates an estate
to collect all of the debtor’s assets into one place identify and categorize claims against the
debtor in terms of priority, and then distribute the assets accordingly.”
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Course Research Paper
References
Spector, M., & DiNapoli, J. (2020, May 8).
Exclusive: J.C. Penney to file for bankruptcy as soon
as next week, sources say
. Https://www.reuters.com.
https://www.reuters.com/article/us-jc-
penney-bankruptcy-exclusive/exclusive-j-c-penney-to-file-for-bankruptcy-as-soon-as-next-week-
sources-say-idUSKBN22K20F
Simon, L. (2019, August 29).
Why companies file for bankruptcy – and how it protects both
debtors and creditors
. Https://theconversation.com.
https://theconversation.com/why-companies-
file-for-bankruptcy-and-how-it-protects-both-debtors-and-creditors-113101