JCPenney’s $950M Lifeline Implodes—120 Stores Across 35 States Now Face The Axe

A $947 million real estate transaction collapsed on December 26, 2025, leaving 119 JCPenney store locations across 35 states in limbo and creditors scrambling for recovery options. Copper Property CTL Pass Through Trust terminated its agreement with Boston-based private equity firm Onyx Partners after months of delays and missed deadlines, instantly triggering litigation over deposits and deal terms while casting doubt on whether creditors will receive expected bankruptcy distributions before a court-imposed January 30, 2026 liquidation deadline.

Legal Battle Erupts Over Failed Transaction

Copper Property moved swiftly to claim $5 million in buyer deposits—$2 million already secured and $3 million held in escrow—asserting that all contractual conditions had been satisfied. Onyx Partners countered with litigation demanding either forced completion or substantial damages, accusing the seller of deliberately withholding essential tenant documentation required for closing. The buyer maintained it remained committed to completing the purchase but needed seller cooperation on outstanding deliverables. Copper Property executives vowed to aggressively defend against all claims, insisting they had fulfilled their obligations under the purchase agreement.

Operations Continue Despite Ownership Uncertainty

Catalyst Brands, JCPenney’s parent company, immediately reassured employees and customers that the failed transaction represented purely a landlord transfer between third parties with zero operational impact. All 119 locations will continue normal operations under existing lease agreements regardless of ownership changes. The portfolio spans 15.5 million square feet concentrated heavily in fast-growing Sunbelt markets, with Texas holding 21 properties and California containing 19. Each location operates under triple-net leases extending up to 45 years, placing responsibility for taxes, insurance, and maintenance squarely on JCPenney while providing stable rental income streams that typically attract institutional investors seeking predictable cash flows with minimal management burdens.

Months of Delays Foreshadowed Collapse

The transaction’s July 2025 announcement projected a September 8 closing date that quickly proved unrealistic. Deadlines slipped first to December 22, then received a final extension to December 26. Copper Property issued its termination notice on December 22, granting Onyx four days to complete the purchase or forfeit the deal entirely. Anton Melchionda, Founder and Principal Partner at Onyx Partners Ltd., released a statement on December 24 claiming certain customary seller deliverables remained outstanding and were being addressed. Two days later, the deal died. The $947 million price tag had sparked immediate controversy, averaging roughly $8 million per property—approximately $2 million below previous Copper Property transactions that averaged $12.8 million per store. Trust investors questioned whether converting to a real estate investment trust structure might have generated superior creditor returns.

Bankruptcy Origins and Recovery Progress

Copper Property CTL Pass Through Trust exists solely because JCPenney filed Chapter 11 bankruptcy protection in May 2020, though operational struggles predated the pandemic by nearly a decade. The court created Copper Property specifically to liquidate 160 retail properties and six distribution centers, reimbursing creditors by January 30, 2026. Mall giants Simon Property Group and Brookfield Asset Management acquired JCPenney’s retail operations for $1.75 billion in late 2020, preserving approximately 60,000 jobs while Copper Property retained properties for separate liquidation. Surprisingly, JCPenney has demonstrated genuine recovery signs. Second quarter fiscal 2025 results showed total net sales declined just 3.4 percent year-over-year to $1.4 billion, while the company swung to $110 million net income compared to a $33 million loss previously. Consolidated adjusted EBITDA reached $179 million, up dramatically from $29 million the prior year.

Uncertain Path Forward

January 2025 brought another transformation when JCPenney merged with SPARC Group to form Catalyst Brands, creating a retail conglomerate encompassing Aéropostale, Brooks Brothers, Eddie Bauer, Lucky Brand, and Nautica. The combined entity launched with approximately 1,800 physical stores, 60,000 employees, $9 billion in annual revenue, and $1 billion in liquidity. Marc Rosen, who stabilized JCPenney post-bankruptcy, now leads Catalyst Brands as chief executive.

Meanwhile, Copper Property confronts brutal realities: restart the entire sales process with weeks remaining before its court-mandated deadline, holding approximately $25 million in cash reserves to fund operations during extended negotiations. Having already sold roughly 40 properties from its original 160-property portfolio, the trust must now evaluate strategic alternatives including selling the entire portfolio to a new buyer, breaking properties into smaller packages, individual sales, or pursuing alternative financing transactions.

Nick Egelanian, president of retail development firm SiteWorks, suggested three probable collapse scenarios: lenders withdrawing financing commitments, Onyx reconsidering underlying valuations, or concerns about JCPenney’s long-term viability eroding buyer confidence.

The failed deal jeopardizes expected distributions of $928 million to $932 million for bankruptcy creditors who also anticipated $15 million from cash reserves within 60 days of closing plus an additional $10 million twelve months later. While JCPenney’s operational improvements offer genuine hope, the unresolved real estate situation continues casting shadows over the 118-year-old retailer’s broader recovery efforts and long-term financial stability.