The Plano, Texas, retailer has struggled for some time with weak sales, a bungled turnaround effort, management changes and board resignations. A number of large shareholders have sold off stakes.
Wednesday's freefall comes as a New York State Supreme Court Judge summoned lawyers for Martha Stewart, J.C. Penney and Macy's Inc. to a hearing, almost two months after the three made closing arguments in a lengthy battle over Penney's partnership with the homemaking maven.
It also follows recent reports that the retailer may run out of cash before the holiday season.
Shares fell $1.58, or 13.3 percent, to $10.32 at midmorning, after earlier dropping as low as $9.93.