Joann, an 80-year-old retailer of fabrics, sewing supplies and other craft materials, has filed for bankruptcy for the second time in a year.
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The company, with more than 800 stores across 49 states, is voluntarily entering a Chapter 11 process to facilitate a speedy deal to find a buyer and pay back its lenders, it announced Wednesday.
The retailer must hold an auction to sell by Feb. 14 to satisfy the requirements to access cash that is being held as collateral, according to court documents.
The agreement was made with lenders who are owed more than $450M, Bloomberg reported, citing court documents. The court must still approve the sale.
“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,” Joann CEO Michael Prendergast said in a statement. “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.”
Joann said it already has a “stalking horse” bidder. Gordon Brothers Retail Partners has agreed to place the first bid, setting the bar for what the market will pay.
The company said it will keep stores open and continue to pay employee wages and benefits. It plans to ask the court for access to cash collateral to ensure it can function.
Joann had $615.7M in debt obligations and $133M of trade debt due and outstanding, according to Bloomberg.
Joann filed for bankruptcy for the first time last March and emerged six weeks later, with its debt cut in half. It previously traded on the Nasdaq but was delisted following that bankruptcy filing and emerged from bankruptcy as a private company.
A wave of big-box stores have similarly come across recent financial distress.
At the end of last month, The Container Store filed for Chapter 11 bankruptcy while continuing operations at its 102 stores.
Big Lots filed for Chapter 11 in September and agreed to sell its assets to Gordon Brothers Retail Partners at the end of the year.
Party City closed all of its stores at the end of 2024 as it weighs going into bankruptcy for the second time in two years. It first went into bankruptcy at the beginning of 2023 and emerged that October.
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