DALLAS >> J.C. Penney has attracted three separate bids to buy the company out of bankruptcy and continue to operate hundreds of its department stores and e-commerce business under the 118-year-old banner.

Negotiations are underway with lenders and bidders, but if the upbeat update provided by Penney’s lawyer today in court stands, Penney will exit bankruptcy late this year with new owners and minus its $3.8 billion in long-term debt.

The other alternative is to liquidate Penney and sell off its assets to pay creditors, but that option “hasn’t been part of any discussions so far,” said Penney’s attorney, Joshua Sussberg. A plan could be approved by late October, he said during a hearing before U.S. Bankruptcy Judge David Jones in Houston.

Sussberg didn’t disclose the bidders, only saying that there are three. Earlier this month, a representative from Lazard, Penney’s investment bank, had said there were three serious bidders for the operating company.

Recent speculative articles have listed potential bidders including Sycamore Partners, mall owners Simon Property Group and Brookfield Property Partners, Authentic Brands Group and Amazon.

Sussberg knocked down one story that came out this week that said Penney would be bought by Sycamore and combined with Belk department stores. He said none of the offers contemplate combining Penney with another brand, and all three bids are for it to emerge as a standalone business.

But the process “needs to move faster” for the plans to work out, given the prospects for the coronavirus pandemic to continue to disrupt business, he said.

The business plan is to sell the operating company and then split off the retailer’s real estate into a real estate investment trust. Much of that work to separate the real estate assets has been completed, Sussberg said.

So far in bankruptcy, Penney has accumulated $1.2 billion in cash, which is $400 million more than prior estimates, he said.

Penney has been slashing expenses, including staff cuts, and Sussberg characterized those expense cuts as permanent and not one-time events to bolster cash. Earlier this month, Penney cut 1,000 corporate jobs, including 717 from its Plano headquarters, resulting in an annual savings of $90 million to $100 million.

Some of the additional cash has come from higher sales than planned and delayed merchandise purchases, he said.

All of Penney’s stores have reopened. The retailer’s 173 off-mall locations are performing better than its 520 mall stores, he said.

Penney is holding store closing sales at 153 stores. In its monthly performance report, it said had revenue of $622 million, in the month ended July 4, down from $775 million a year ago. Profit for the month was $47 million vs. a loss of $25 million a year ago.

Overall sales and traffic have become more challenging with the recent COVID-19 resurgence in markets that traditionally open schools early, Sussberg said. That would include mostly southern states such as Texas, Arizona, Georgia and Florida.

The retailer is negotiating with landlords and making “meaningful progress,” Sussberg said. Penney is also negotiating with suppliers to receive better terms. Suppliers are requiring Penney pay in cash and in advance for merchandise.