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Joann came to an agreement with creditors to take the retailer private a month after filing for bankruptcy.
Joann Inc. announced court approval to exit bankruptcy proceedings just over a month after it initially filed for Chapter 11 bankruptcy.
The financial restructuring agreement will allow all 815 retail locations to remain open and Joann will also continue to employ more than 18,000 workers. Joann will exit the process as a private company, owned by the creditors who agreed to eliminate $505 million in debt, about half of what the craft retailer owed.
Joann is No. 301 in the Top 1000, Digital Commerce 360’s ranking of North America’s leading retailers by online sales. Digital Commerce 360 categorizes Joann as a Toys & Hobbies retailer.
Joann’s bankruptcy filing
The retailer first filed for bankruptcy on March 18, citing struggles to maintain sales after consumers cut back on hobby spending.
It listed $2.44 billion in total debts and $2.26 billion in total assets in the filing.
At the time, Joann had entered into a Transaction Support Agreement (TSA) with the majority of its financial stakeholders. It received $132 million in new financing in March, and it reported plans to reduce its debt by $505 million thanks to the new funding and agreements with lenders and vendors.
The Prepackaged Joint Plan of Reorganization approved by the U.S. Bankruptcy Court for the District of Delaware closely reflected the initial deal Joann made with creditors.
“I appreciate that this degree of consensus, especially in a case with stakes this high, isn’t forged by accident, but is the result of good and hard work,” U.S. bankruptcy judge Craig Goldblatt said at a hearing on the agreement.
The craft retailer hired Alvarez & Marsal North America, LLC as restructuring advisor. Latham & Watkins LLP served as Joann’s legal advisor, it said.
What happens next for Joann after bankruptcy
“We are pleased to have reached this significant milestone less than 40 days after initiating our court-supervised process,” chief customer officer and interim co-CEO Chris DiTulio said in a written statement. “We could not have reached this point without the unwavering dedication of our Team Members, the continued support of our industry partners and landlords, and the tremendous loyalty and enthusiasm of our customers. JOANN will move forward with a strengthened financial foundation, allowing us to invest in customer experience enhancements, our best-in-class product assortments, and our more than 18,000 Team Members nationwide.”
The other co-interim CEO, financial officer Scott Sekella echoed the sentiment.
“With a strengthened balance sheet and improved liquidity, we are better positioned to work collaboratively with our vendors, business partners and landlords, and ultimately to inspire the creativity in our customers that helps them find their happy place,” he said.
Joann has not had a permanent CEO in nearly a year. Former CEO Wade Miquelon retired in May 2023. Miquelon called fiscal 2023 a “challenging year” before his exit. The retailer’s board of directors has been searching for a new CEO since then.
Despite Joann’s debt, the business is in a promising place, according to the bankruptcy filing. 96% of stores have positive cash flow. Additionally, online sales accounted for 13% of revenue in fiscal 2024, the filing said. Stores and online sales will continue to operate with no changes, Joann said.
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