Hudson, Ohio — Joann Inc., a fabrics and sewing retailer based in Hudson, Ohio, has filed for prepackaged Chapter 11 bankruptcy. The company’s 829 stores and its website will remain open for business.
Following the bankruptcy process, if approved, Joann will become a private company owned by some of its lenders and other industry parties, and its shares will no longer be listed on Nasdaq or any other national stock exchange. As of March 19, the company’s stock has been delisted.
Joann expects to emerge from the voluntary bankruptcy process as early as April.
In addition to the bankruptcy decision, the 81-year-old company has entered into a transaction support agreement with a majority of its financial stakeholders and additional industry financing parties. As part of the agreement, Joann has received commitments for approximately $132 million in new financing and related financial accommodations.
“This agreement is a significant step forward in addressing Joann’s capital structure needs, and it will provide us with the financial resources and flexibility necessary to continue to deliver product assortments and enhance the customer experience wherever they are shopping with us,” says Scott Sekella, Joann’s chief financial officer.
He adds that 95% of the company’s stores are “cash-flow positive.” Sekella and Chris DiTullio, Joann’s chief customer officer, took over interim CEO duties when Wade Miquelon, the company’s former president and CEO, stepped down in May 2023.
Joann expects that the new capital infusion will reduce the company’s debt on its balance sheet by approximately $505 million. CNN reports that the retailer’s debt had “ballooned to $1 billion.”
Joann expects all obligations to employees, vendors, landlords and other trade creditors to be paid or otherwise satisfied in full and honored in the ordinary course of business as part of the capital infusion. The company is filing customary “first day” motions with the U.S. Bankruptcy Court for the District of Delaware to fulfill those obligations.
“We appreciate the support from our financial and industry stakeholders in this agreement, and their confidence in our ability to continue driving positive business change,” says DiTullio.
Joann’s advisors include Latham & Watkins LLP (legal counsel); Houlihan Lokey (financial advisor); Alvarez & Marsal North America LLC (restructuring advisor). Gibson Dunn & Crutcher LLP is serving as legal counsel to certain of the company’s term lenders, with Lazard serving as financial advisor.
Joann Inc. was founded in 1943 as a single storefront in Cleveland and has grown to 829 stores in 49 states. In its fiscal 2024 third-quarter results, which ended on Oct. 28, Joann’s net sales had declined 4.1% year-over-year but its e-commerce sales grew by 11.5% in that timeframe.
The company has only been public for approximately 3 years.
— John Nelson
SOURCE: www.REBusinessOnline.com