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For the second time in less than a year, Joann Inc. has filed for Chapter 11 bankruptcy protection. This time, it is also trying to sell itself to another company in an attempt to “maximize the value of its business.”
The Ohio-based crafts retailer was facing a difficult remanufacturing environment, interim CEO Michael Prendergast said Tuesday.
This, coupled with declining sales and limited inventory levels, forced the company to file for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, once again.
In March 2024, the company filed for Chapter 11 for the first time after 81 years in business, and subsequently became a private company. It has not closed any of its more than 800 locations in 49 states at that time.
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“After carefully reviewing all available strategic paths, we have determined that initiating a court-supervised sale is the best course of action to maximize the value of the business,” Prendergast said. “We hope that this process will enable us to find a path that will allow Joan’s to continue operating as a going concern.”
A customer enters Joann’s store in El Cerrito, California, US, on Wednesday, January 8, 2025. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
The company announced that it is seeking court approval to begin the process of selling substantially all of its assets to Gordon Brothers Retail Partners LLC. Gordon will act as the “stalking horse” bidder, the party that agrees to make an initial bid for the bankrupt company’s assets, often before the formal auction process begins.
According to Joan, Gordon Brothers has indicated that it intends to pursue the divestment of the company and conduct out-of-business sales at all store locations.
Joann Fabrics store in Wyomissing, Pennsylvania. (Tim Leddy/MediaNews Group/Reading Eagle via Getty Images/Getty Images)
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The Company continues to actively solicit alternative bids. It said it had received inquiries from parties potentially interested in continuing to operate the stores and online business on an ongoing basis.
If other qualifying bids are submitted during court-supervised sales, Joann plans to hold an auction or auctions, with the stalking horse’s bid setting the floor for the auctions.
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In the meantime, the company plans to keep all its stores open. Its online store will also continue to operate as usual. The company said its employees will continue to receive salaries and benefits.