Joann, the fabrics chain, files for bankruptcy again
FILE-Cars sit in the parking lot outside a Joann store in Davenport, Iowa. (Daniel Acker/Bloomberg via Getty Images)
Joann, the crafts and fabrics chain, has filed for bankruptcy a second time in less than a year.
The Ohio-based company first filed for bankruptcy in March 2024 and became a private company a month later to keep its U.S. stores.
Why is Joann filing for bankruptcy again?
Joann is searching for a buyer to rescue the company from liquidation.
Court documents obtained by Bloomberg show that under a proposed deal with lenders who are owed over $450 million, Joann would be required to hold an auction within 30 days or risk losing its access to money being held as collateral.
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Bloomberg reported that Joann has to win court approval for the sale process and the company has an offer from liquidator Gordon Brothers Retail Partners, which would serve as the first bid.
Court documents noted that if a higher offer is made by Feb.12, Joann would hold an auction. However, if a higher bid isn’t made than Joann would sell to Gordon Brothers.
Additionally, the company had $615.7 million of funded debt obligations as well as $133 million of trade debt due and outstanding, according to Chapter 11 documents filed on Wednesday in a Delaware court.
Joann CEO addresses bankruptcy
What they're saying:
"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," interim CEO Michael Prendergast said in a press release, obtained by CNN.
Joann has 850 stores across the country and CNN noted that the stores and website will stay open while the company manages the sales process.
The backstory:
Founded in 1943, Joann filed for Chapter 11 bankruptcy in March 2024 and listed over $2.44 billion in total debts versus about $2.26 billion in total assets in Chapter 11 petition last year.
In its initial filing, Joann said the company received commitments for approximately $132 million in new financing and expects to reduce its debt by about $505 million.
Meanwhile, the organization did not address the reasons behind their increased debt, but the Associated Press reported last year that consumers have been spending less on non-essential items amid inflation.