J. C. Penney Co. Inc. is facing objections from minority lenders regarding the sale of its assets to Simon Property Group and Brookfield Property Group, Women's Wear Daily reported Oct. 6, citing a Texas bankruptcy court filing.

A group of first-lien minority lenders accused the retailer and other lenders of trying to "fast-track" the sale process at its expense.

Lenders including Aurelius Capital Management, Bank of America and Credit Suisse Loan Funding said that while they have no objections to the deal itself, they do object to "the structure of the credit bid, which has been designed to enrich" the debtor-in-possession lender group. The minority lenders said the current structure of the deal can "grossly undervalue" the assets.

Under the deal's credit agreement, another group of first-lien lenders will hold the majority of the first-lien debt. Funds including Ares, Brigade, H/2 Capital Partners, Silver Point, KKR, Sculptor Capital, Sixth Street Partners, White Box, Owl Creek and Apollo are in the majority group.

J.C. Penney declared Chapter 11 bankruptcy in May. In September, the department store operator reached a deal that would split J.C. Penney into an operating company and two property companies. Under the deal, one company would hold 161 stores and the other would hold distribution centers, with a master lease agreement between the two.

The rescue deal is valued at about $1.75 billion and would include a $300 million equity investment, $2 billion of new asset-based lending and $500 million of so-called take-back debt from existing first-lien lenders.

J.C. Penney did not immediately respond to emailed requests for comment from S&P Global Market Intelligence.