I'm not familiar with bankruptcy procedures, so take what I say with a grain of salt. That being said, if I'm not mistaken this other lender group represents the 19% that Matthew (JCP's representation attorney) said in the last status meeting of May 28 in which he indicated presented them with an alternative DIP offering. If that is the case, I think that if a group of lenders that represent only 19% of the loans in question are willing to give you a DIP offering that is better than those of the original DIP Lenders, which represent 75% of the first lien positions, than that can easily be implied that there is more value than JCP & the original DIP lenders are trying to portray. And their objection is basically saying just that. In general, Creditors are for themselves, so I have no doubt they are looking for their own interest. However, If these guys see more value in the company that they are willing to offer JCP similar to better terms, then they see more value. If they are advocating there is more value in JCP and shareholders are advocating the same thing, than the question is what exactly is that extra value. And I imagine that is what bankruptcy is all about, what is the value of the company. I do like these paragraphs (it just might be as the saying goes, the enemy of my enemy is my friend):
6. In addition, as Debtors’ counsel pointed out at the May 28, 2020 status conference, the Debtors have opened 300 stores and are on track to open another 200 stores by the time of the hearing on the proposed DIP financing. Clearly, the value of the lenders’ collateral was at its trough prior to the filing when a near nationwide shutdown was imposed, but that value is actually increasing each day that the Debtors open more stores and move through these cases. Also, given the fact that stores have started reopening and continue to reopen, the Debtors’ cash position is undoubtedly increasing and at the same time, the Debtors are better able to manage disbursements through the bankruptcy process. As a result, the Debtors should be in a much stronger cash position today as compared to where they were on the Petition Date, so the Debtors will not be prejudiced in any way if the Court chose not to approve the proposed DIP financing today.
7. Simply put, the Court cannot lose sight of the fact that the objections raised herein are not simply intra-creditor issues of lenders and noteholders being disparately treated within their own contracts. The objections go to the fundamental fairness of the bankruptcy process, the standards by which post-petition financing should be governed and the fate of these Chapter 11 Cases. As explained above and within this Objection, the Ad Hoc Crossholder Group has offered alternative DIP financing that is materially better for the estates as a whole in every aspect. So, there can be only one answer as to why the Debtors have not yet accepted the Ad Hoc Crossholder Group’s Alternative DIP Proposals—the proposed DIP Lenders have threatened to use their 75% position in the first lien debt to force the Debtors into a liquidation if they don’t get their way. This type of behavior is outrageous and demonstrates careless disregard for the 85,000 employees of J.C. Penney, its thousands of creditors, the integrity of the chapter 11 process and this Court’s authority.
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