Fabric and craft retailer Joann has filed for bankruptcy for a second time in the past year, blaming slow sales, inventory issues, and being hundreds of millions of dollars in debt.
The 82-year-old chain, which has more than 800 locations across the U.S., filed for Chapter 11 bankruptcy protection for the first time in March 2024, Breitbart News reported.
Citing “acute and unexpected” inventory issues that led to an “unexpected ramp-down, and, in some cases, the entire cessation of production,” the company said in court documents obtained by CNN that its $615 million debt left it in an “untenable position.”
A Wednesday press release from company officials said they commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware to “facilitate a sale process to maximize the value” of the business.
Joann is seeking a sale of “substantially all of its assets,” with Gordon Brothers Retail Partners — which bought much of Big Lots in December to save them from closing hundreds of stores — as the stalking horse bidder at an undisclosed price.
If Joann receives a better offer at a public auction, it could sell itself to another buyer, however.
The fabric store chain became a private company in April 2024 after filing for bankruptcy the first time but still hung on to its locations.
“Since becoming a private company in April, the Board and management team have continued to execute on top and bottom-line initiatives to manage costs and drive value,” interim CEO Michael Prendergast said in the press release.
“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,” he continued. “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.”
John Bringardner, head of analytics firm Debtwire, told CNN that Joann company officials made a mistake when they did not close locations when they filed for Chapter 11 last year, and predicted that the company will liquidate.
“Unless Joann is able to find a higher bidder during a bankruptcy auction, Gordon will take control of the company and most likely launch going out of business sales, and remaining employees will be laid off,” Bringardner said.
Prendergast said, “We hope that this process enables us to find a path that would allow JOANN to continue operating as a going concern” in the recent press release.
