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J.C. Penney has reached a tentative deal to sell its business and stores to a group of mall owners and lenders in a move that would save the department store chain from liquidation.

The retailer disclosed Wednesday during a bankruptcy hearing that it had struck the deal with Simon Property Group, Brookfield Property Partners and a group of bankruptcy lenders.

The deal is expected to save more than 600 stores and 70,000 jobs. The company has separately announced plans to liquidate 242 locations.

J.C. Penney filed for Chapter 11 bankruptcy protection in May after temporary store closures due to the COVID-19 pandemic accelerated the company’s troubles, which have been compounding for years.

The company’s attorneys warned Aug. 31 that deal negotiations with prospective mall property owners had stalled, increasing the chance of total liquidation.

But Joshua Sussberg, a Kirkland & Ellis lawyer representing J.C. Penney, said Wednesday during a court hearing that the retailer had patched things up with its prospective buyers.

“We believe and feel comfortable that everybody will be rowing in the same direction,” he said. “We’ve had a few screaming matches, including earlier today, but we got there.”

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Mall property companies have been getting more aggressive in recent years with a strategy of acquiring struggling tenants to preserve their rental income and minimize vacancies. In February, Simon was part of a group that agreed to buy fashion retailer Forever 21 out of bankruptcy, and in 2016, Simon was part of a group that bought fashion retailer Aéropostale out of bankruptcy.

The J.C. Penney deal would involve several elements, including:

• A $300 million investment by Simon and Brookfield, which are collectively expected to own most of the stores.

• The assumption of $500 million in J.C. Penney debt by Simon and Brookfield.

• The establishment of a trust holding an undisclosed but minority number of J.C. Penney stores owned by first-lien lenders, which will rent the locations to the operating company owned by Simon and Brookfield.

• A $2 billion secured financing package from Wells Fargo.

When the deal is done, J.C. Penney will have about $1 billion in cash to continue operations, Sussberg said.

“It’s been an effort around the clock,” he said. “We are in a position to move this into the end zone.”

Facing digital disruption, declining foot traffic to malls and nimbler physical competitors like discounters T.J. Maxx and Marshalls, J.C. Penney has reported declining sales in recent years.

When the coronavirus pandemic erupted, the retailer’s prospects dwindled swiftly, much like other mall retailers that have filed for bankruptcy protection in recent months, including Neiman Marcus, J. Crew and Brooks Brothers.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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