The arts and crafts retailer Joann files for bankruptcy for the second time

For the second time in less than a year, Joann Inc. filed for Chapter 11 bankruptcy protection. This time, it is also trying to sell itself to another company to “maximize the value of its business.”

Interim CEO Michael Prendergast said Tuesday that the Ohio-based craft retailer is struggling with a challenging retail environment.

This, coupled with declining sales and limited inventory, once again forced the company to file for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware.

In March 2024, the company filed for Chapter 11 for the first time in 81 years in business and subsequently became a private company. At this time, none of the more than 800 locations in 49 states have closed.

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“After carefully considering all available strategic avenues, we have concluded that initiating a court-supervised sale process is the best course of action to maximize the value of the company,” Prendergast said. “We hope this process will allow us to find a path that will allow Joann to continue operating.”

A customer enters a Joann store in El Cerrito, California on January 8. (David Paul Morris/Bloomberg via Getty Images / Getty Images)

The company announced that it is seeking court approval to initiate a process to sell substantially all of its assets to Gordon Brothers Retail Partners LLC. Gordon would act as a “stalking horse” bidder, which is a party that agrees to make an initial bid for the insolvent company’s assets, often before a formal auction process begins.

According to Joann, Gordon Brothers has indicated that it intends to liquidate the company and hold sales at all of its stores.

A Joann Fabrics store in Wyomissing, Pennsylvania is seen on April 11, 2012. (Tim Leedy/MediaNews Group/Reading Eagle via Getty Images / Getty Images)

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The company continues to actively seek alternative offers. Inquiries have been received from parties who are potentially interested in continuing to operate the branches and online businesses.

If other qualified bids are submitted during the court-supervised sales process, Joann plans to conduct one or more auctions with the stalking horse bid setting the stage for the auction processes.

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In the meantime, the company plans to keep all of its stores open. The online shop also continues to operate as usual. The company said its employees would continue to receive salaries and benefits.