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Financial, Retail

JOANN Files for Bankruptcy and Delists Stock

JOANN has filed for Chapter 11 bankruptcy, entering into an agreement to reduce debt and receive $132 million in new capital, and says the company's stores and website will remain open for business, and that it will continue to pay trade vendors.

3/20/2024
HUDSON, Ohio -- JOANN Inc. (NASDAQ: JOAN) (“JOANN” or the “Company”), the nation’s category leader in sewing and fabrics with one of the largest arts and crafts offerings (including a small selection of home goods, area rugs and mats), announced that it has entered into a Transaction Support Agreement (“TSA” or “Agreement”) with a majority of its financial stakeholders and additional industry financing parties to strengthen the Company’s financial position. In connection with the TSA, the Company has received commitments for approximately $132 million in new financing and related financial accommodations and expects to reduce funded debt on its balance sheet by approximately $505 million. The parties have also agreed to a six-month extension of the Company’s existing ABL and FILO credit facilities, effective upon the Company’s emergence from the court-supervised process. Under the TSA and related transaction documents, all obligations to employees, vendors, landlords, and other trade creditors will be paid or otherwise satisfied in full and honored in the ordinary course of business.

“Over the past several months, JOANN has made meaningful business improvements through the execution of our Focus, Simplify and Grow cost reduction initiative,” said Chris DiTullio, Chief Customer Officer and co-lead of the Interim Office of the CEO. “We are excited by our progress on both top and bottom-line initiatives in the past year and are confident the steps we are taking will allow JOANN to drive long-term growth. 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. There is no other retailer with the same ability to serve sewists, quilters, crocheters, crafters and other creative enthusiasts as we have for the past 80 years, and we take great pride in seeing the passion and engagement of our millions of customers and our Team Members.”

Scott Sekella, JOANN’s Chief Financial Officer and co-lead of the Interim Office of the CEO, added, “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 best-in-class product assortments and enhance the customer experience wherever they are shopping with us. This includes our more than 800 stores across the United States, 95 percent of which are cash flow positive. We remain committed to our suppliers, partners, Team Members and other stakeholders, and are focused on ensuring we continue to operate as usual so we can continue to best serve our millions of customers nationwide.”

The financial restructuring contemplated by the TSA will be implemented through a prepackaged court-supervised process in which JOANN will continue to operate in the ordinary course of business. JOANN’s stores and the JOANN.com website will remain open and continue operating as normal and customers vendors, landlords, and other trade creditors will not see any disruption in services. The Company remains as focused as ever on providing customers with quality products and services that inspire their creativity.

To effectuate the recapitalization transactions, JOANN and certain of its affiliates have initiated voluntary prepackaged Chapter 11 cases in the U.S. Bankruptcy Court for the District of Delaware. With the significant support of the Company’s financial stakeholders, JOANN expects to complete this process on an expedited basis, as early as late April 2024. Following this process, the Company expects that JOANN will become a private company owned by certain of its lenders and industry parties, and its shares will no longer be listed on Nasdaq or any other national stock exchange.

In connection with this process, JOANN is filing a number of customary “first day” motions to enable it to continue uninterrupted operations during the financial restructuring, including, among others, to continue paying wages and providing benefits to employees and to pay trade vendors and other general unsecured obligations in full in the ordinary course of business.

Additional information regarding JOANN’s financial restructuring is available at JOANNforward.com. Court filings and information regarding the claims process are available at https://cases.ra.kroll.com/Joann, by calling the Company’s claims agent, Kroll, at 844-488-7837 (toll-free in the U.S.) or 646-777-2384 (for international calls), or by sending an email to joanninfo@ra.kroll.com. Additional information can also be found in a Current Report on Form 8-K that the Company will file with the Securities and Exchange Commission at www.sec.gov.
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