Joann files for bankruptcy protection — 3rdTime will not be the charm next time

Joann has filed for Chapter 11 bankruptcy protection for the second time in less than a year. 

The 82-year-old crafts and fabrics retailer said it filed for voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware to facilitate a sale process “to maximize the value of its business.” Joann is seeking a sale of substantially all of its assets, with Gordon Brothers Retail Partners serving as the “stalking horse” bidder. (Gordon Brothers recently completed a sale transaction with Big Lots.)

Joann’s stores and website will remain open for business as usual during the sale process. The retailer operates more than 800 stores across 49 states.

In court documents, Joann blamed “unexpected” and “acute” inventory issues, and said it faced an “unexpected ramp-down, and, in some cases, the entire cessation of production” of important items that shoppers come to the store for. The issues took a big bite out of sales and put its $615 million debt in an “untenable position.”

“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,” stated interim CEO Michael Prendergast in a release. “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. We hope that this process enables us to find a path that would allow Joann to continue operating as a going concern.”

Joanne previously filed for bankruptcy in March 2024, and as planned, exited shortly after in April. Under the retailer’s bankruptcy restructuring, Joann’s creditors agreed to cancel some $505 million of the company’s nearly $1.1 billion in long-term debt. No stores were closed as part of the reorganization.

Upon exiting bankruptcy, Joann became a private company owned by some of its creditors, and Prendergast, a managing director in Alvarez & Marsal’s consumer and retail group, was named interim CEO.

The proposed transaction with Gordon Brothers is subject to higher and better offers, among other conditions. Joann said it continues to actively solicit alternate bids. If other qualified bids are submitted during the court-supervised sale processes, it plans to conduct an auction or auctions, with the stalking horse bid setting the floor for the auction processes.

Kirkland & Ellis is serving as legal counsel to JOANN, with Centerview Partners LLC serving as financial advisor and Alvarez & Marsal North America, LLC serving as restructuring advisor.

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