The restructuring plan divided JC Penney into two entities: a retail operations arm led by Brookfield and Simon, and a real estate holding company, 'PropCo,' controlled by H2 Capital Partners.
Moore and Barnett Capital, holding over $300 million in JC Penney bonds acquired post-bankruptcy, claim the restructuring was a 'multibillion-dollar heist.' They argue the deal funneled control of JC Penney to H2 Capital Partners, Simon Property Group, and Brookfield Asset Management at the expense of other creditors and shareholders.
The personal relationship between Judge David Jones and Elizabeth Freeman, a partner at Jackson Walker, has become central to the controversy, leading to calls for scrutiny over the 2020 bankruptcy proceedings.
Critics argue that JC Penney had sufficient assets to repay creditors and leave equity for shareholders, a claim dismissed by the court in favor of the approved plan.
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