Analyzing the Bankruptcy of JOANN Inc.
The rise and fall of companies can be both sudden and decisive, creating significant impacts on economies and communities. JOANN Inc., a beloved brand among crafting enthusiasts, recently found itself at the center of such a pivotal moment with its bankruptcy filing.
To fully understand JOANN Inc.’s path to bankruptcy, we must explore the company’s rich history, the promises of its ambitious 2024 restructuring plans, and the unraveling that led to its downfall in 2025.
JOANN Inc.'s Business and Background of Bankruptcy Filing
JOANN Inc., a prominent crafts retailer specializing in fabrics and sewing item supplies, has been a go-to destination for hobbyists, crafters, and DIY enthusiasts across the United States. It began its journey in 1943, when German immigrants opened a small fabric store, Cleveland Fabric Shop, in Cleveland, Ohio.
By the 1960s, the company had opened subsequent stores across the Midwest, rebranding to Jo-Ann Fabrics nationwide. The 1970s and 1980s marked significant growth for the company, as it broadened its product offerings beyond fabrics to include crafts, arts supplies, and home decor products, making it a one-stop shop for all crafting needs.
In the late 1990s, JOANN Fabrics & Crafts cemented its status as a leading retail chain in the crafting sector by expanding to over 800 stores across 49 states and employing 19,000 workers. This growth was driven by strategic acquisitions of competitors and an increase in market share. [1]
As the digital age emerged, JOANN embraced e-commerce, reaching a wider audience with dedicated online platforms that mirrored its extensive in-store offerings.
Despite its well-established market presence, JOANN Inc. found itself seriously challenged by financial difficulties. Facing intense competition from online retail stores and dealing with inventory shortages and declining in-store sales, JOANN filed for Chapter 11 bankruptcy on March 18, 2024. [2]
Initial Bankruptcy Filing and Strategic Financial Restructuring
JOANN Inc. filed for Chapter 11 protection, primarily due to a decline in sales as consumers reduced spending on hobbies. The company reported total debts amounting to $2.44 billion against total assets of $2.26 billion.
To address its financial struggles, JOANN entered into a Transaction Support Agreement (TSA) with the majority of its financial stakeholders. This strategic agreement facilitated the injection of $132 million in new financing by March.
In addition, JOANN planned a significant reduction of $505 million in its debt, supported by the fresh funding and new agreements with lenders and vendors.
The Prepackaged Joint Plan of Reorganization, approved by the U.S. Bankruptcy Court for the District of Delaware, was closely aligned with the original agreement made with creditors, laying a foundation for JOANN’s planned revival.
Who Supported The 2024 Restructuring?
In 2024, JOANN Inc.’s restructuring plan emerged as a beacon of hope amidst the turbulent retail sector. However, the Chapter 11 bankruptcy filing in the U.S. Bankruptcy Court laid the groundwork for a promising turnaround.
The involvement of Gordon Brothers Retail Partners LLC introduced an expert touch to the sale process and the optimization of JOANN’s retail environment. Their strategic guidance was instrumental in managing inventory levels and implementing store closing procedures efficiently. [3]
Key factors contributing to the optimism around Joann Inc.’s restructuring included:
- Enhanced Supply Chain Management
- Strategic Store Closings Reduced Costs
- Strengthened Online Presence
- Optimized Gift Card Program
What Went Wrong With JOANN Inc. in 2025?
Despite being a beloved name for sewing supplies and other craft essentials, the company could not escape the broader retail environment pressures. Factors contributing to financial challenges in 2025 included:
- Retail Environment Struggles: JOANN Inc. was hit by inventory shortages and supply chain disruptions. These factors severely affected their ability to keep popular items in stock, impacting sales.
- Increased Competition: Online retailers intensified their competition, offering better prices and convenience, which drew customers away from traditional retail chains like JOANN.
- Operational Challenges: With more than 800 store locations, the company struggled with elevated inventory levels that did not align with customer purchase patterns, leading to costly excesses.
- Strategic Missteps: As part of its restructuring efforts, JOANN engaged with GA Group and Gordon Brothers Retail Partners LLC to manage a possible sale process and optimize store closing procedures. However, these efforts could not stave off the need for bankruptcy protection.
On January 15, 2025, JOANN Inc. initiated voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the District of Delaware. This marked the second bankruptcy filing within a year for the longstanding 82-year-old fabric and craft retailer.
Subsequently, in a court motion filed on February 12, 2025, JOANN revealed plans to close around 500 of its approximately 800 stores across the nation, with the possibility of further closures in the future.
Impacts of JOANN's Bankruptcy Filing on Stakeholders
JOANN Inc.’s Chapter 11 bankruptcy affects many stakeholders, including employees, investors, suppliers, creditors, and local communities. Each faces challenges prompted by store closures, retail environment shifts, and operational strategy changes.
- Shareholders and Investors: Investors are concerned about potential losses and equity changes as JOANN restructures. Stock prices may fluctuate, impacting perceptions and long-term growth prospects.
- Suppliers and Creditors: Suppliers risk payment delays and supply chain disruptions, needing to track restructuring plans and possibly diversify clients. Creditors must navigate legal procedures to recover claims, often requiring debt restructuring discussions.
- Community and Local Economy: Store closures impact jobs and local economies, reducing foot traffic and affecting nearby businesses. JOANN’s operational changes might challenge local suppliers and service providers.
Present Status of JOANN Inc.
Joann, an established retailer in the fabric and crafts industry for over 80 years, is winding down its operations, planning to shut down all of its stores across the country following its second filing for Chapter 11 bankruptcy protection.
Initially, the company grappled with declining sales and announced plans to shut 500 stores while maintaining around 300 locations in operation. However, after an unsuccessful attempt to secure a buyer who could sustain the store network, JOANN has closed all stores. [4]
Contact Richard West Law Office in Ohio for a free consultation if your business is facing bankruptcy.
Sources:
[1] Crafts retailer Joann files for Chapter 11 bankruptcy as consumers cut back on pandemic-era hobbies. (2024, March 18). PBS News. https://www.pbs.org/newshour/economy/crafts-retailer-joann-files-for-chapter-11-bankruptcy-as-consumers-cut-back-on-pandemic-era-hobbies
[2] Fancsalszky, N. (2025, February 17). US Bankruptcy: JOANN files ‘chapter 22’ bankruptcy in Delaware just eight months after exiting first restructuring; Gordon Brothers to lead auction with liquidating bid – CreditSights. CreditSights. https://know.creditsights.com/us-bankruptcy-joann-files-chapter-22-bankruptcy-in-delaware-just-eight-months-after-exiting-first-restructuring-gordon-brothers-to-lead-auction-with-liquidating-bid/
[3] Gordon Brothers provides $100M exit facility commitment as agent for Jo-Ann Stores. (2024, March 26). Gordon Brothers. https://www.gordonbrothers.com/press-release/gordon-brothers-provides-100m-exit-facility-commitment-as-agent-for-jo-ann-stores/
[4] Cerullo, M. (2025, February 25). Joann is closing all of its remaining stores and going out of business. CBS News. https://www.cbsnews.com/news/joann-fabrics-closing-stores-going-out-of-business-sales/
