Joann Fabrics Files for Chapter 11 Bankruptcy Again

Joann Inc., the popular arts-and-crafts retailer, has filed for Chapter 11 bankruptcy protection for the second time. The 80-year-old company faces significant financial challenges, prompting a decision to seek a sale process to stabilize its operations. This filing highlights the ongoing pressures that have plagued the retailer despite prior restructuring efforts.

Urgency in Restructuring

Lawyers representing Joann emphasized the urgency of the situation in court filings, citing severe liquidity constraints. "Time is of the essence," they stated, underscoring the need for a swift and effective sale process to avoid the prolonged financial erosion that extended bankruptcy proceedings can cause.

Joann plans to keep its stores and online platform operational during this period. Restructuring and investment firm Gordon Brothers has made a “stalking horse” bid, setting a baseline for potential buyers. However, Gordon Brothers has indicated plans to liquidate the company’s assets and initiate going-out-of-business sales if a higher bidder does not emerge.

Efforts to Secure a Buyer

Joann currently operates about 800 stores and is actively seeking better offers from parties interested in preserving the brand and its operations. The company has reportedly garnered interest from potential buyers who aim to keep Joann running. In the meantime, employees are continuing to receive their wages and benefits, and customers can still access Joann’s full product range both in-store and online.

Gift cards and returns remain valid, and the company has reassured shoppers that its operations will continue as usual throughout the restructuring process.

Financial Turmoil Continues

This marks Joann’s second bankruptcy filing in less than a year. After exiting Chapter 11 in April as a private entity owned by its creditors, the company has struggled to maintain financial stability. Court filings reveal that Joann’s liabilities range from $1 billion to $10 billion, illustrating the severity of its financial strain.

The Path Forward

The future of Joann remains uncertain as it navigates this critical juncture. The company’s ability to secure a buyer committed to preserving its operations will determine its fate. While Gordon Brothers has a history of liquidating troubled retailers, Joann’s efforts to attract other bidders could provide a lifeline for the iconic brand.

For now, loyal customers and employees can take some comfort in the continuation of business as usual. However, with liquidation looming as a potential outcome, Joann’s legacy as a cornerstone of the arts-and-crafts community hangs in the balance.