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For the second time in less than a year, Joann Inc. filed for Chapter 11 bankruptcy protection. This time, it is also trying to sell itself to another company in an effort to “increase the value of its business.”
Interim CEO Michael Prendergast said Tuesday that the Ohio-based craft retailer had been dealing with a difficult retail environment.
That, coupled with declining sales and inventory levels, forced the company to file for bankruptcy protection in the US Bankruptcy Court for the District of Delaware, as well.
In March 2024, the company filed for Chapter 11 for the first time after 81 years in business, after which it became a private company. It did not close any of its more than 800 locations in 49 states during that time.
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“After carefully reviewing all available strategic options, we have determined that initiating a court-supervised sale process is the best course of action to maximize the value of the business,” Prendergast said. “We hope this plan will enable us to find a way to allow Joann to continue operating as a going concern.”
A customer walks into Joann’s store in El Cerrito, California, US, on Wednesday, Jan. 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 all of its assets to Gordon Brothers Retail Partners LLC. Gordon will act as a “stalking horse” bidder, which is a group that agrees to make the first bid for a bankrupt company’s assets, often before the formal auction process begins.
According to Joann, Gordon Brothers has indicated that it intends to close the company and sell out of business at all of its retail locations.
Joann Fabrics store in Wyomissing, Pennsylvania. (Tim Leedy Group/MediaNews/Reading Eagle via Getty Images/Getty Images)
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The company continues to solicit other bids. It said it has received inquiries from groups that may be interested in continuing to operate online stores and businesses.
If other qualified bids are submitted during the court-supervised sale process, Joann plans to hold an auction or auction, where the next horse’s bid ends the auction process.
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For now, the company plans to keep all of its stores open. Its online store will also continue to operate as normal. Its employees will continue to receive wages and benefits, the company said.
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