Hudson-based Joann Inc. has filed for Chapter 11 bankruptcy for the second time in less than a year.
The company said the voluntary filing was to facilitate a sale process to maximize its value.
According to the company, all employees will continue to receive pay and benefits.
“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.”
Joann kept all of its stores open, something very different than what most retailers do when reorganizing their finances.
"You've got hundreds of locations, not all of them are going to be performing, you really need to reduce your footprint, try to trim down to a more manageable size," said John Bringardner, head of Debtwire. "Joann tried to restructure its debt and keep that size and that effort failed."
Good Morning Cleveland anchor Mike Brookbank spoke to Bringardner about the future of Joann stores.
Bringardner said Gordon Brothers Retail Partners, which recently bought much of Big Lots, has already emerged as a potential buyer for Joann.
"What we often see in these retail bankruptcies is a buyer may come in, buy the brand, maintain it online in some form, but it's highly likely most of those stores will close and people will unfortunately lose their jobs," said Bringardner.
If Joann can't find a buyer to keep the business going, the retailer could be forced to close its headquarters in Hudson and cut more than 660 jobs over the next six months. The company disclosed that information in a layoff notice filed with the state.
Last March, Joann filed for Chapter 11 bankruptcy.
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Joann Inc. is one of the largest arts and crafts chains in the country, with around 800 stores and more than 18,000 employees.
