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Crafts retailer Joann files for bankruptcy for a second time
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For the second time in less than a year, Joann Inc. filed for Chapter 11 bankruptcy protection. This time, it’s also trying to sell itself to another company in an effort to “maximize the value of its business.”
Interim CEO Michael Prendergast said Tuesday that the Ohio-based crafts retailer had been contending with a challenging retail environment.
That, coupled with sagging sales and constrained inventory levels, forced the company to file for bankruptcy protection in U.S. Bankruptcy Court for the District of Delaware, again.
In March 2024, the company filed for Chapter 11 for the first time after 81 years in business, and subsequently became a private company. It didn’t shutter any of its over 800 locations across 49 states at the time.
LEASES FOR NEARLY 700 PARTY CITY LOCATIONS TO BE AUCTIONED OFF
“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,” Prendergast said. “We hope that this process enables us to find a path that would allow Joann to continue operating as a going concern.”
A customer enters a Joann store in El Cerrito, California, on Jan. 8. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
The company announced that it’s seeking court approval to start a process for the sale of substantially all of its assets to Gordon Brothers Retail Partners LLC. Gordon would serve as the “stalking horse” bidder, which is a party that agrees to make an initial bid for the assets of the bankrupt company, often before a formal auction process begins.
According to Joann, Gordon Brothers has indicated that it intends to pursue a liquidation of the company and conduct going out-of-business sales at all store locations.
A Joann Fabrics store in Wyomissing, Pennsylvania, is seen on April 11, 2012. ( Tim Leedy/MediaNews Group/Reading Eagle via Getty Images / Getty Images)
PARTY CITY GOING OUT OF BUSINESS AFTER 40 YEARS
The company is continuing to actively solicit alternate bids. It said it has received inquiries from parties potentially interested in continuing to operate the stores and online businesses on an ongoing basis.
If other qualified bids are submitted during the court-supervised sale processes, Joann plans to conduct an auction or auctions, with the stalking horse bid setting the floor for the auction processes.
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In the meantime, 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 pay and benefits, the company said.
Crafts retailer Joann has announced that it has filed for bankruptcy for the second time in recent years. The company previously filed for Chapter 11 bankruptcy in 2011.
The bankruptcy filing comes after Joann faced financial challenges due to the ongoing COVID-19 pandemic, which has significantly impacted its business operations. The company has been struggling with declining sales and increased competition from online retailers.
In a statement, Joann CEO Wade Miquelon said, “The decision to file for bankruptcy was a difficult one, but it is necessary to ensure the long-term viability of our business. We are committed to serving our customers and continuing to provide them with the quality products and services they have come to expect from us.”
Despite the bankruptcy filing, Joann has stated that it will continue to operate its stores and website as usual. The company also plans to reorganize its operations and emerge from bankruptcy stronger and more competitive.
Customers can still shop for their favorite craft supplies at Joann stores or online, and the company is working to ensure that there will be no disruptions to its services during the bankruptcy process.
As a beloved retailer for craft enthusiasts, Joann’s bankruptcy filing is sure to have an impact on its loyal customers and the crafting community as a whole. We will have to wait and see how the company navigates this challenging time and what changes may come as a result of the reorganization process.
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crafts retailer, Joann, bankruptcy, second time, financial news, retail industry, Chapter 11, business updates, economic news
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