Joann, the national fabric and crafts retailer known for its extensive chain of stores, has filed for Chapter 11 bankruptcy as it struggles with a heavy debt load in today's challenging economic environment. With consumers tightening their belts and reducing discretionary spending, the Hudson, Ohio-based company is working to restructure its finances. In a statement released on earlier today, Joann expressed confidence that it will emerge from bankruptcy by the end of next month and transform into a privately-owned entity, as informed by the bankruptcy court filing. This will result in Joann's shares being pulled from the public stock exchanges.
The retailer operates more than 800 stores across the country, including over 20 locations in Massachusetts, all of which are expected to remain open for business as usual during the bankruptcy proceedings. In a move to reassure its stakeholders, Joann has indicated that vendors and other trade creditors are expected to continue being paid without disruption, thanks to an agreement that secures financial support from the majority of its shareholders. The company has secured about $132 million in new financing, aiming to wipe nearly $505 million in funded debt off of its balance sheet, as reported by MassLive.
Scott Sekella, the Chief Financial Officer and current co-head of the CEO’s interim office at Joann, described the transaction support agreement as a significant milestone. "This transaction support agreement marks a significant step forward in addressing our company’s capital structure needs," Sekella stated, according to court filings.
Financial documents revealed in the bankruptcy petition showed that Joann had declared more than $2.44 billion in total debts against about $2.26 billion in total assets, referencing data from October 2023. Founded in 1943, Joann has witnessed significant changes in its ownership structure over the years. It went private back in 2011 when it was acquired by the equity firm Leonard Green & Partners for roughly $1.6 billion. In a twist of fate, a decade after that acquisition and despite being majority-owned by Leonard Green & Partners, Joann went public with an initial offering at $12 a share, a move now overshadowed by its latest financial restructuring efforts.
