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Negotiations to sell J.C. Penney to one of the largest mall owners in the country or other investors have stalled, placing the retailer on the edge of a potential liquidation of the entire chain.

The company had been negotiating a sale to one of three potential buyers, including a consortium that included Simon Property Group, the nation’s largest mall property owner. Simon had reportedly been in talks to turn certain J.C. Penney and Sears locations at Simon malls into Amazon distribution centers.

“We’ve hit a stalemate,” said Joshua Sussberg, a Kirkland & Ellis attorney representing J.C. Penney, in a court hearing Monday. “Our drive in the red zone stalled.”

He did not name Simon but said the retailer was in advanced negotiations with a property company that owned more than 160 J.C. Penney locations to do a deal before the talks fell apart.

The company is pivoting to negotiations for “credit bid” by its bankruptcy financiers, including H/2 Capital Partners LLC and Silver Point Capital LP. If such a deal goes through, the lenders would own J.C. Penney, likely as a much smaller company than it is today. But the lenders said at the bankruptcy hearing that there is no guarantee they can get a deal done.

“We are going to do everything humanly possible to ensure that J.C. Penney will be around for the foreseeable future,” Sussberg said.

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He said the company plans to negotiate the deal within the next 10 days.

“We are absolutely laser-focused on saving 70,000 jobs and maximizing the value of these estates,” Sussberg said.

Bankruptcy Judge David Jones, who has repeatedly expressed a preference to save J.C. Penney from liquidation if possible, asked Sussberg: “Is there anything that you think that I can do to maximize the opportunities that are available to the debtors?”

Sussberg said it would be helpful to get the judge’s approval to close unprofitable locations the company plans to liquidate as part of its restructuring plan. J.C. Penney has initiated plans to close more than 240 locations, leaving it with about 600 remaining.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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