Deal will allow the retailer to avoid liquidation, keep stores open.

CORPUS CHRISTI, Texas – Two of the nation’s largest mall owners have agreed to acquire J.C. Penney’s retail business, a deal that would allow the retailer to avoid liquidation and keep stores open and some 70,000 employees on the job heading into the holidays.

When it filed for bankruptcy protection, in May, Penney had 850 stores, many anchoring malls around the country. The Plano, Texas-based Penney also had $10.7 billion in annual sales and about 85,000 employees at that time.

At a bankruptcy court hearing here on September 9, lawyers for mall owners Simon Property Group and Brookfield Property Partners said the buyers would pay $300 million in cash and assume $500 million in debt in a deal that will spin off Penney’s real estate assets into a separate business owned by the retailer’s creditors.

Wells Fargo agreed to give Penney $2 billion in revolving credit once the transaction is completed. Penney must gain approval from the U.S. Bankruptcy Court judge who is presiding over the case before the deal can go through. The retailer reportedly will seek such approval from Judge David Jones in the coming weeks.

The proposed purchase is also subject to competing bids. Potential buyers include Hudson’s Bay, owner of Saks Fifth Avenue, and Sycamore Partners, private equity firm.