Two top mall owners—Brookfield Property Partners and Simon Property Group—have signed a draft agreement to buy J.C. Penney out of Chapter 11.

If the parties work out the final sticking points, and the deal receives court approval, J.C. Penney should exit Chapter 11 by December, CEO Jill Soltau said in a statement.

Under a business plan it filed earlier this year, the chain, which now numbers 846 stores, will close 242 of them, leaving it with a 604-store fleet.

The nonbinding deal agreement calls for the two mall giants to acquire substantially all of J.C. Penney’s retail and operating assets through a combination of cash and new term loan debt. But it also involves the formation of several holding companies, including one that gives its first-lien lenders control of 160 of its real estate assets and distribution centers.

Any deal is subject to court approval. A hearing is set to take place in early November.

The new deal also means that, going forward, J.C. Penney, which was delisted from the New York Stock Exchange last year, will no longer be a public company, although its two new owners are both publicly listed.

The new deal is a substantial achievement for a company that many had thought was living on borrowed time when it first filed for Chapter 11 in March. It also allows the two mall owners to keep a valuable anchor tenant alive; Penney’s disappearance could have hurt many of their shopping centers.

The filing capped a tumultuous decade for the 118-year-old department store, during which it changed its CEO five times. The 18-month reign of Ron Johnson, the former head of the Apple stores, was generally considered the disaster that led Penney to its current state.

One aspect of the deal will likely raise anxiety levels among the chain’s employees: The agreement calls for the chain’s two owners to turn over Penney’s benefit pension plan to the the Pension Benefit Guaranty Corp., the federal program that insures it, according to a report in The Dallas Morning News. The newspaper said it was not clear how that will affect the plan, which covers 52,000 future and current retirees.

J.C. Penney’s bankruptcy papers can be seen here.

(Image courtesy of J.C. Penney)

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