Months 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.
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.
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."
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