JOANN Inc. could be the latest retailer to disappear from the landscape after filing Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware. It’s not déjà vu — the company filed Chapter 11 last year and was taken private last spring.
While not a massive player in toys and games, JOANN is yet another distribution outlet, particularly for arts, crafts, and activities.
This time around, JOANN says it’s looking to “facilitate a sale process to maximize the value of its business.” Gordon Brothers Retail Partners is a stalking horse bidder, though the company is pursuing higher bids and plans to conduct an auction or auctions of its property. In a Customer FAQ shared via the JOANN Restructuring website, the company says that should a sale to Gordon Brothers occur, the firm “has indicated that it intends to pursue a liquidation of the company and conduct going out of business sales at all store locations.”
“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 Michael Prendergast, Interim Chief Executive Officer of JOANN in a statement. “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.”
A look at today’s filing reveals deep debt, including nearly $7.5 million owed to Low Tech Toy Club dba The Woobles.
For now, the company says its stores and website will remain open with employees to receive normal pay and benefits.
Case information can be found at Kroll, with additional information available at joannrestructuring.com
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