Joann Chapter 11 Again Amid Asset Sale Fears Should No Buyer Be Found

Arts and crafts retailer Joann Inc. has filed for Chapter 11 bankruptcy protection for the second time within 12 months and this time round the The Ohio-based retailer announced that it is looking for a sale.

The 82-year-old retailer confirmed in a corporate statement Wednesday that ongoing soft sales and inventory issues had forced it to file for Chapter 11 once again. Joann filed for bankruptcy in March 2024 but at the time gave a positive spin on the situation and emerged a month later as a private company, retaining all of its 800-odd stores.

This time round Joann cited inventory issues that were “acute and unexpected,” and commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware.

The company is seeking court approval to commence a process for the sale of substantially all of its assets under Section 363 of the U.S. Bankruptcy Code pursuant to which Gordon Brothers Retail Partners, which recently sold Big Lots, would serve as the stalking horse bidder. The proposed transaction is subject to higher and better offers, among other conditions.

Joann Chapter 11

In a statement Joann said: “The company 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.”

January is typically the time that many ailing retailers consider bankruptcy options, after trading through the holiday season and January discounting and the company stressed that it is looking for the best value deal it can strike.

“Since becoming a private company in April [after it exited its first Chapter 11 process], the board and management team have continued to execute on top- and bottom-line initiatives to manage costs and drive value,” said Michael Prendergast, Interim Chief Executive Officer of Joann. “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.”

Joann Leads Crafts Retail

The nation’s leader in sewing and fabrics, with one of the largest arts and crafts offerings in the U.S., Joann has grown to include more than 800 stores across 49 states alongside an ecommerce business.

As recently as the fall, Joann was pitching new value brands, an expanded yarn assortment, price reductions on more than 10,000 items storewide, and special offer events every weekend.

However, it was almost certainly a mistake for Joann not to us the opportunity to close locations during its first bankruptcy process and industry analysts have predicted that if Joann is unable to find a higher bidder during the bankruptcy auction, Gordon will take control and likely launch going out of business sales, with the retailer’s remaining employees losing their jobs.

Currently, Joann’s stores and website have remained open while it goes through the sales process and the company said that its employees will also continue to receive their pay.

Today’s Joann Chapter 11 announcement comes nearly five years after it received a brief pandemic boom when people were stuck at home and pivoted to spend more money on arts and crafts. However, since it has returned to a long term decline in sales, which it has been unable to reverse.