Joann Files for Second Bankruptcy in a Year, Seeks Buyer to Avoid Liquidation

HUDSON, Ohio — Joann, the 82-year-old fabric and craft retailer, has filed for Chapter 11 bankruptcy for the second time in less than a year, citing financial struggles and inventory challenges. The company announced the filing Wednesday in Delaware, aiming to facilitate a sale process to maximize its business value.

Joann secured approximately $132 million in new financing, which is expected to reduce its $1 billion debt by about half. Despite the bankruptcy filing, the company assured customers that its 830 stores across 49 states and its website will remain open and operational. “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, Joann’s interim CEO. “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.”

Joann is seeking court approval to sell substantially all of its assets, with Gordon Brothers Retail Partners, LLC, acting as the “stalking horse” bidder. The proposed sale is subject to higher and better offers, and if qualified bids emerge, Joann plans to conduct an auction. Gordon Brothers, which recently acquired much of Big Lots, would set the floor for the auction process.

The company has already begun closing some stores, with at least eight locations across Iowa, North Carolina, Maryland, Pennsylvania, New York, and Massachusetts slated to shut down. Amanda Hayes, Joann’s director of corporate communications, described the closures as “part of routine store location evaluation and optimization.” She noted that Joann has also opened new and remodeled locations, including stores in Great Falls, Montana, and Maplewood, Minnesota.

Joann, which sells crafting supplies such as fabric, sewing machines, and home decor, was acquired by private equity firm Leonard Green & Partners in 2011 for $1.6 billion. The company went public in 2021 at $12 per share but returned to private ownership in April following its initial bankruptcy filing. If no buyer is found, Gordon Brothers plans to liquidate the company, potentially resulting in the loss of 661 corporate jobs in Hudson, Ohio, and going-out-of-business sales at all locations.

Joann previously filed for bankruptcy in March 2024, emerging on April 30 with reduced debt and no store closures or layoffs. This latest filing underscores the ongoing challenges facing the retail sector, particularly for specialty retailers like Joann.