Last week, J.C. Penney (JCP) (KTP) announced that it had skipped a $12 million interest payment on its 6.375% Senior Notes due in 2036, entering a 30-day grace period before it officially defaults. The company says it will use this time to "evaluate certain strategic alternatives": presumably bankruptcy and out-of-court debt restructuring.
One thing is clear: J.C. Penney won't be able to meet its current obligations. And given the difficulty of achieving consensus among creditors without the legal tools available through the bankruptcy courts, a bankruptcy filing is all