Is Joann Fabric going out of business? Retailer warns of possible liquidation in second Chapter 11 bankruptcy

Popular arts-and-crafts retailer Joann Inc. has filed for Chapter 11 bankruptcy protection for a second time, hoping to facilitate a sale process as the distressed company navigates yet another pivotal moment in its 80-year history.

The decision comes as the company faces continued financial pressures. “Time is of the essence,” lawyers for the company said in a court filing this week. “The Debtors face significant liquidity constraints which are best addressed through a swift but robust marketing and sale process, in turn avoiding the value-destructive consequences of protracted Chapter 11 cases.”

Stores will stay open for now but the future is uncertain

In a press release, Joann said it would continue to operate its stores and online platform as usual while seeking court approval to sell its assets. Restructuring and investment firm Gordon Brothers has stepped in to make a “stalking horse” bid, which will be used for a baseline as Joann attempts to find a buyer.

Joann has warned that Gordon Brothers intends to liquidate and commence going-out-of-business sales at all of its store locations if it can’t find a higher bidder. Gordon Brothers recently acquired the assets of embattled retailers Big Lots and is currently closing most locations, although it reached a deal to keep at least 200 open.

Fast Company reached out to Gordon Brothers for comment.

Joann, which currently has about 800 stores, further said it is actively soliciting better offers and has “received interest from parties” that wish to keep Joann operating.

Amid the restructuring, it says employees are still receiving their wages and benefits. In the short term, Joann has assured customers that its stores nationwide remain open, with the full product assortment available both in-store and online.

For shoppers, there is no immediate impact on product availability or services. Gift cards and returns are still being accepted, ensuring business operations remain customer-focused throughout this process.

The filing marks Joann’s second bankruptcy in under a year. The company exited Chapter 11 last April as a private entity owned by its creditors.

Recent court filings reveal the retailer’s liabilities range from $1 billion to $10 billion, underscoring the financial pressures that have continued to challenge its operations despite earlier restructuring efforts.