March 20 J.C. Penney Co Inc bondholders
who last month claimed the retailer had breached a covenant of a
bond indenture withdrew and rescinded their notice of default on
March 18, the company said in a regulatory filing on Wednesday.
The bondholders' law firm, Brown Rudnick, in early February
sent Penney a letter saying that the department store operator
had breached a covenant by granting a lien on its inventory.
The letter said Brown Rudnick represented investors who hold
more than half of the outstanding bonds due in 2037.
The indenture agreement related to $326 million of
outstanding bonds that mature in 2037, although the letter said
that J.C. Penney could be in default on all of its $2.9 billion
bond debt, according to a lawsuit filed by Penney soon after.
In a lawsuit, Penney asked a Delaware judge to declare that
it was not in a default of its bond agreements.
The withdrawal of the notice of default is a break for
Penney at a time concerns are high the chain could face a cash
crunch after it reported a 31.7 percent decline in same-store
sales during the fourth quarter.
Brown Rudnick was not immediately available for comment.
Shares of J.C. Penney ended regular trading on Wednesday
down 0.7 percent at $16.17. The stock has fallen more than 50
percent in the past year.