(Bloomberg) — Joann Inc., the fabric and crafts retailer that emerged from Chapter 11 less than a year ago, is considering filing for bankruptcy again as it runs out of cash, according to people with knowledge of the matter.
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A final decision hasn’t been made, and the company is also exploring other options including a potential sale and raising additional capital, said the people, who asked not to be identified because the discussions are private.
A recent request by lenders that Joann set aside reserves to cover their losses in the event of a bankruptcy, as well as a low reappraisal of its inventory, are among factors pushing Joann toward another filing, some of the people said.
Joann’s debt prices plummeted this week after Bloomberg News reported that the Hudson, Ohio-based company is working with advisers to help shore up its balance sheet and ease liquidity pressures. The privately held chain has engaged Centerview Partners and Kirkland & Ellis, while a group of lenders to the company is working with Gibson Dunn & Crutcher.
A representative for Joann didn’t respond to requests for comment, while messages left with Centerview and Kirkland were not returned.
Lenders took control of Joann in the process of its first bankruptcy, which saw the company cut debt but keep all of its more than 800 locations in operation. Just a few months after the company exited Chapter 11 in April 2024, it began asking vendors for rebates and retroactive discounts as sales dragged, Bloomberg previously reported.
Joann is among a slew of retailers that have struggled in the past two years as consumers cut back on spending due to inflation and higher interest rates. The Container Store Group Inc. and Party City Holdco Inc. filed for Chapter 11 protection last month, with the latter choosing to cease operations.
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