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Penney Co Inc bondholders who last month claimed the retailer had breached a covenant of a bond indenture withdrew and rescinded their notice of default on March 18, the company said in a regulatory filing on Wednesday.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.
Continue Reading Below
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.
(Reporting by Phil Wahba in New York; Editing by Steve Orlofsky)