Joann Fabrics and Crafts, facing financial challenges and seeking a buyer, has filed for bankruptcy for the second time in 2024. The company aims to avoid liquidation through a court-approved sales process.
Joann , the crafts and fabrics chain, has filed for bankruptcy for the second time in less than a year. The Ohio-based company first filed for bankruptcy in March 2024 and emerged as a private company a month later to keep its U.S. stores operating. Joann is now actively seeking a buyer to rescue the company from liquidation.
Court documents obtained by Bloomberg reveal that under a proposed agreement with lenders who are owed over $450 million, Joann would be obligated to hold an auction within 30 days or risk losing access to funds currently held as collateral. Bloomberg reported that Joann needs to secure court approval for the sales process. The company has received an offer from liquidator Gordon Brothers Retail Partners, which would serve as the initial bid. Court documents indicate that if a higher offer is submitted by February 12th, Joann will proceed with an auction. However, if no higher bid is received, Joann will sell to Gordon Brothers. Additionally, the company reported $615.7 million in funded debt obligations and $133 million in trade debt due and outstanding, according to Chapter 11 documents filed on Wednesday in a Delaware court. '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 stated in a press release obtained by CNN.Joann operates 850 stores across the country, and CNN noted that both the stores and website will remain open while the company manages the sales process. Founded in 1943, Joann filed for Chapter 11 bankruptcy in March 2024 and listed over $2.44 billion in total debts compared to approximately $2.26 billion in total assets in its Chapter 11 petition last year. In its initial filing, Joann stated that the company received commitments for approximately $132 million in new financing and anticipated reducing its debt by about $505 million. Meanwhile, the organization did not address the reasons behind their increased debt. However, the Associated Press reported last year that consumers have been spending less on non-essential items amid inflation
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