The trust that terminated a pending $947 million sale of a portfolio of J.C. Penney stores has moved to dismiss a lawsuit charging it with breach of contract.
Copper Property CTL Pass Through Trust on Friday said it had filed a motion on Feb. 10 to have the litigation lodged by Onyx Partners thrown out of court. The legal battle stems from the trust scuttling a sales agreement in December that the Boston-based private equity firm had to acquire nearly 220 J.C. Penney locations across the nation.
In fact, the Jersey City, New Jersey-based trust in its recently filed 2025 annual report said that Onyx's pending lawsuit, which seeks $200 million in damages, could hinder its quest to sell the group of department stores. If the trust can't find a buyer, it may instead transfer the properties into a real estate investment trust or to an alternative investment vehicle, according to the 10-K securities filing.
The trust and Onyx didn't immediately respond to emails from CoStar News on Friday seeking comment.
The trust, created during J.C. Penney's bankruptcy reorganization in 2020, was originally tasked with finding buyers for 160 stores and several distribution centers in an effort to reimburse the retailer's creditors. It had been selling stores in a piecemeal basis but retained Newmark in 2024 to market the large portfolio of over 100 stores.
Onyx emerged as the buyer in July last year and struck an agreement to purchase the portfolio. But the trust pulled the plug on the sale Dec. 26, alleging that Onyx had failed to satisfy some conditions of the sale by the closing date.
Deal challenged
"Onyx did not come to the closing table with the required funds," Neil Aaronson, the trust's principal executive officer, said Friday during a brief call on its year-end results.
Before the agreement was terminated, Onyx filed a breach-of-contract suit, according to the trust's securities filing. In its complaint, the private equity firm said it was in compliance with the terms of the deal.
"We believe that these claims are without merit, and we are proceeding accordingly," the trust said in its securities filing. "However, this litigation and related procedural filings demand the time and attention of management and involve significant legal costs and could interfere with our ability to sell the properties until it is resolved."
The trust was originally slated to be dissolved early this year. Now that date has been pushed back to April 30.
In its annual report, the trust outlined the various challenges it faces, in addition to the pending litigation, in selling the remaining J.C. Penney stores, which are long-term leased to the chain. Those headwinds include macroeconomic factors such as volatile capital markets, high interest rates and the retail real estate market in general, according to the trust.
"The trust may not be able to sell the properties at the optimal time or for an optimal price in order to maximize its recovery," it said in the 10-K filing. "The number of potential buyers for the retail Properties may be limited by the presence of such properties in retail or mall complexes. In addition, the trust's ability to sell or dispose of the properties may be hindered by the fact that such properties are subject to the leasehold rights of the tenant which may make such properties less attractive to a potential buyer than alternative properties that may be for sale."
If the store portfolio remains unsold and is transferred to a newly formed REIT, that may further delay any sale, the trust said in its filing.
J.C. Penney has triple-net master leases on all the stores, with tenants paying insurance, taxes and maintenance costs.