On January 15, 2025, JOANN Inc. commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware. That was the second bankruptcy filing in a year for JOANN, an 82-year old fabric and craft retailer. The company first filed for bankruptcy protection in March 2024 and emerged as a privately owned entity, managing to keep all of its stores open. However, according to management, a challenging retail environment and severe inventory issues precipitated the second bankruptcy filing.
JOANN commenced bankruptcy proceedings in January while undergoing a strategic marketing process for the sale of all of its assets, continuing operations as a going concern and without material reduction in store count. As the sale process progressed, however, it became clear that a subset of underperforming stores would not be acquired through the sale process. As a result, JOANN announced in a motion filed with the bankruptcy court on February 12, 2025, that it plans to close approximately 500 of its roughly 800 stores nationwide, with potential additional closings in the future. While the closures will occur in each of the 49 states in which it operates, stores located in New York, California, Florida, Ohio and Pennsylvania will be hit the hardest.
Whether their lease is rejected as a result of a store closure or assumed and assigned in connection with the contemplated sale, landlords of the retailer should follow the case closely to protect their rights.
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