Joann filed for Chapter 11 bankruptcy in a Delaware court, the company said in a news release on Wednesday, Jan. 15. The chain known for sewing and other craft materials said the move will help facilitate a sale to maximize the business's value.
Interim CEO Michael Prendergast said the bankruptcy declaration was necessary despite the chain's efforts to drastically improve its financial health.
"Since becoming a private company in April [2024], the Board and management team have continued to execute on top- and bottom-line initiatives to manage costs and drive value," said Prendergast. "However, the last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step.
"After carefully reviewing all available strategic paths, we have determined that initiating a court-supervised sale process is the best course of action to maximize the value of the business. We hope that this process enables us to find a path that would allow JOANN to continue operating as a going concern."
The company previously declared bankruptcy in March 2024 and emerged from court-supervised financial restructuring the next month, cutting its funded debt in half and securing $153 million in exit financing. Joann said it didn't lay off workers or close any of its more than 800 locations during the 2024 bankruptcy process.
Despite the second bankruptcy in less than a year, Joann has pledged to keep stores open and employees on payroll during the restructuring process. Before the January 15 announcement, Newsweek reported Joann was closing six locations, including stores in Owings Mills, Maryland; Holyoke, Massachusetts; Ithaca, New York; and Williamsport, Pennsylvania.
Gordon Brothers Retail Partners, LLC, has been named the "stalking horse" bidder, setting the minimum offer for an upcoming auction of Joann’s assets. Joann will continue to solicit higher bid offers before the company goes to auction.
Joann filed customary court motions to continue paying employee salaries and benefits. The company is also seeking approval to use cash collateral to continue operating.
You can learn more about Joann's bankruptcy process at joannrestructuring.com.
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