Joann Enters Chapter 11 Bankruptcy Again

Arts-and-crafts retailer Joann Inc. (Hudson, Ohio) said it has voluntarily entered Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware to facilitate a sale process that will maximize the value of its business. In the meantime, the chain will continue to operate as usual.

Joann is seeking court approval to sell substantially all its assets to Gordon Brothers Retail Partners LLC, which is serving as an initial “stalking horse” bidder. The proposed transaction is subject to higher and better offers, and the company said it continues to actively solicit alternate bids. If other qualified bids are submitted during the court-supervised sale processes, the company plans to conduct an auction or auctions, with the stalking horse bid setting the floor for the auction processes.

“Since becoming a private company in April, the board and management team have continued to execute on top- and bottom-line initiatives to manage costs and drive value,” said Interim CEO Michael Prendergast. “However, 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.

“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.”

Founded as a single storefront in Cleveland in 1943, the sewing and fabrics retailer has grown to more than 800 stores across 49 states.