By SDCN Editor
Hudson, Ohio–Joann Incorporated, a sewing and fabrics company announced that it has commenced 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.
The retail chain will close around 500 locations nationwide, company officials announced.
Joann stores and its website is open in the ordinary course and continues to serve customers. Employees are continuing to receive pay and benefits.
The struggling 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 under which Gordon Brothers Retail Partners, LLC would serve as the “stalking horse” bidder. The proposed transaction is subject to higher and better offers, among other conditions. 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.
The Hudson, Ohio-based retailer filed for bankruptcy protection in March 2024 citing consumers’ cut back on discretionary spending. Joann became a private company in April after it was delisted on Nasdaq in March.
“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,” said Michael Prendergast, interim Chief Executive Officer of Joann.
Through the filing of customary motions with the court, the retail chain intends to uphold its commitments to customers and partners, including continued payment of employee wages and benefits.
The company intends to seek approval for a consensual use of cash collateral to ensure it has the liquidity necessary to support its operations.
