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.
“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.”
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.
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.
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.
This story originally appeared on NYPost
