By Dietrich Knauth
NEW YORK (Reuters) – Craft retailer Joann Inc received a U.S. bankruptcy judge’s approval on Thursday for a restructuring that would eliminate $505 million in debt and keep all 815 retail locations open.
U.S. Bankruptcy Judge Craig Goldblatt approved Joann’s restructuring plan at a court hearing in Wilmington, Delaware, saying the bankruptcy was “a very good outcome” for the company’s employees, landlords, and craft suppliers.
Joann creditors, who agreed to cancel about half of the company’s debt and take ownership of the company’s post-bankruptcy equity, unanimously voted for the restructuring.
“You’ve all made this very easy for me,” Goldblatt said during the hearing. “I appreciate that this degree of consensus, especially in a case with stakes this high, isn’t forged by accident, but is the result of good and hard work.”
Joann entered Chapter 11 bankruptcy on March 18, after negotiating a prepackaged restructuring deal with its creditors and investment funds that owned 66% of the company’s equity shares.
The deal will result in no change for the craft retailer’s 18,000 employees or the landlords for its 815 stores, the company said. The company’s existing equity shares will be wiped out as part of the restructuring.
Joann could emerge from bankruptcy by April 30, according to its court filings.
Founded in 1943, the Ohio-based company is a leading
national retailer of sewing, arts and crafts, and select home décor products. Joann has about one-third of the U.S. market share for sewing products sold to consumers, and the company had overall net sales of $2.2 billion in 2023, according to its court filings.
Joann blamed its bankruptcy on increased competition from online craft supply sales, rising freight costs, and a slump in sales after the end of the COVID-19 pandemic, which temporarily boosted demand for at-home crafting supplies, fabric, and mask-related products.
(Reporting by Dietrich Knauth; Editing by Leigh Jones and David Gregorio)
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