KYLE MURPHYStaff Writer

For the second time within a year, JOANN Fabrics has announced it has filed for Chapter 11 bankruptcy with the intent to sell.

The fabric and crafts company announced Wednesday, Jan. 15, it had 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. Company officials added that stores and its website JOANN.com will be open and continue to serve customers, as well as employees continue to receive pay and benefits.

JOANN Fabrics originally filed for bankruptcy in March 2024, citing increasing interest rates and decreasing sales following the COVID-19 pandemic. The company would exit from Chapter 11 bankruptcy the following month and delisted from the NASDAQ stock exchange to become a private company once more after going public in 2021.

With its latest filing, JOANN Fabrics is seeking the court’s approval to commence a process for the sale of substantially all of its assets under Section 363 of the U.S. Bankruptcy Code pursuant to which Gordon Brothers Retail Partners, LLC (“Gordon Brothers”) would serve as the “stalking horse” bidder. The proposed transaction is subject to higher and better offers, among other conditions.

Earlier this month, Gordon Brothers Retail Partners, LLC, had reached an agreed to a sale transaction with Big Lots following its announcement of its remaining stores would begin “going out of business” sales. The purchase, alongside with partner Variety Wholesalers, would save between 200 and 400 Big Lots stores, and up to two distribution centers.

Company officials said in a statement that the Company continues to actively solicit alternate bids, and 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.

“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. “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.”

Prendergast went on to thank the thousands of employees for their “dedication to our customers and mission, especially in light of everything our company has gone through in recent years.”

“We remain committed to continuing to support them and serving our customers–the sewists, quilters, crocheters, crafters and other creative enthusiasts we have served for more than 80 years–during the process,” Prendergast said.

Through the filing of customary motions with the court, JOANN officials said the company intends to uphold its commitments to customers, employees, and partners, including continued payment of employee wages and benefits. The company will also intend to seek approval for a consensual use of cash collateral to ensure it has the liquidity necessary to support its operations.

Locally, JOANN Fabrics and Crafts is located in Tullahoma at Northgate Mall at 1600 N. Jackson St., and first opened its doors at Northgate Mall in May 2014.

Founded in 1943, JOANN Fabrics currently operates approximately 800 stores and 40 distribution centers. The company employs 19,000 employees, 3,400 of whom are full-time and 15,600 part-timers. The retailer is best known for selling sewing, arts and crafts and home decor merchandise.