Barnett U.S. Equity Fund Announces Breach-of-Contract Lawsuit Alleging Violations of J.C. Penney Bondholder Protections

Complaint seeks damages arising from alleged breaches of mandatory contractual protections governing collateral securing publicly traded bonds.

MIAMI, July 21, 2026 /PRNewswire/ -- Barnett U.S. Equity Fund LP announced today that it has filed a breach-of-contract lawsuit filed in the Commercial Division of the Supreme Court of the State of New York against Wilmington Trust, National Association and UMB Bank, N.A., arising from their respective roles as indenture trustees and collateral agents during the J.C. Penney Chapter 11 bankruptcy proceedings.

The complaint concerns approximately $333.3 million in aggregate principal amount of First Lien and Second Lien publicly traded bonds. The complaint alleges that the defendants released or impaired the collateral that secured the bonds prior to complying with mandatory provisions contained in the governing indentures, pledge agreements, and intercreditor agreements.

According to the complaint, the governing agreements required the delivery, review, and verification of Officer's Certificates and, where applicable, Opinions of Counsel confirming compliance with the contractual conditions governing any release of collateral. The complaint alleges that Wilmington relied on generalized lien-release language in the Chapter 11 plan rather than the Officer's Certificates and Opinions of Counsel required by the governing agreements before collateral was released. In addition, the complaint alleges that UMB Bank did not confirm whether it obtained, reviewed, and relied upon the required Officer's Certificates and Opinions of Counsel despite repeated written requests.

The lawsuit further alleges that the defendants failed to satisfy their post-default contractual duties under the governing indentures, including duties to investigate, ascertain the pertinent facts, and exercise the care and skill required before taking actions affecting collateral securing the bonds.

Barnett U.S. Equity Fund does not challenge the validity of the underlying restructuring transactions or the Bankruptcy Court's orders. Instead, the lawsuit seeks damages arising from the defendants' alleged failure to comply with their independent contractual obligations under the governing agreements when collateral securing the bonds was released or impaired.

"This lawsuit seeks damages arising from alleged breaches of the mandatory contractual protections governing publicly traded bonds," said Andrew Carrillo, Fund Manager of Barnett U.S. Equity Fund LP and President of Barnett Capital Advisors. "Our complaint alleges that the governing agreements required specific provisions be met before collateral could be released. Wilmington stated in writing that it relied on the Chapter 11 plan and confirmation order instead of those required contractual certifications. We believe those alleged contractual failures caused hundreds of millions of dollars in damages to holders of the publicly traded bonds at issue in the lawsuit."

The complaint asserts claims for breach of the First and Second Lien Indentures, breach of the applicable pledge and security agreements, and breach of the related intercreditor agreements. The Fund seeks compensatory damages and other relief available under the governing contracts and New York law.

The case is captioned Barnett U.S. Equity Fund LP v. Wilmington Trust, National Association and UMB Bank, N.A., Index No. 654724/2026, in the Commercial Division of the Supreme Court of the State of New York, County of New York. The complaint is available through the public docket here

About Barnett U.S. Equity Fund LP

Barnett U.S. Equity Fund LP is a Delaware limited partnership managed by Barnett Capital Advisors, an SEC-Registered Investment Adviser. The Fund invests in publicly traded securities and, when appropriate, seeks to protect and enforce the contractual and legal rights associated with its investments. This press release is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or investment interest. For additional information about Barnett Capital Advisors, visit www.barnettcapitaladvisors.com. 

Members of the media seeking further information may contact the Fund’s media contact or litigation counsel using the information below.

Media Contact

Melissa Perez
Barnett Capital Advisors
444 Brickell Avenue, Suite 820
Miami, FL 33131
[email protected]
(305) 328-8538

Litigation Counsel

Daniel Y. Gielchinsky, Esq.
DGIM Law, PLLC
[email protected]
(786) 698-6301

Lorne E. Berkeley, Esq.
Paul Kowalek, Esq.
Berkeley Law P.A.
[email protected]
[email protected]
(954) 719-3484

SOURCE Barnett U.S. Equity fund LP