Retail chains that run out of money rarely reach a happy ending.
Instead, they die slow deaths as efforts to save them become futile.
At first, you get the inevitable changed marketing and other efforts to bring in more customers. Those efforts rarely have enough money behind them to have enough impact to changes the fate of the companies.
Related: Another popular beauty brand files Chapter 11 bankruptcy
Somewhere in there you get leadership changes, to people who have turned around other brands. Unless they come with a big infusion of cash, that’s almost never successful either.
Finally, you get the bankruptcy filing. In rare cases, that gives a company a chance to reorganize, get its debt under control, and emerge from court proceedings with a workable balance sheet.
The problem right now is that money is very expensive, so unless vendors and landlords offer very good terms, chances are a Chapter 11 bankruptcy filing, even a successful one, will be just one last gasp along a death march.
We have recently seen chains like Party City, and now Joann Fabrics, emerge from Chapter 11 and tout their great futures. In reality, these chains come out of Chapter 11 barely able to operate and with little room for error.
In many cases if customers don’t come roaring back, a company will make another filing, which usually leads to a liquidation. That’s happening at Joann, a chain that filed Chapter 11 bankruptcy, emerged from it, and then almost immediately plunged back in.
Joann has already disclosed that it’s closing all its stores, but we have seen cases — for example, Big Lots — where closing does not mean the end. For a company that has a very devoted audience, there has always been a chance that a white knight might emerge.
The latest news, however, suggests that there will be no happy ending for fans of the fabric retailer.
Image source: TheStreet
Joann enters a dark part of Chapter 11 bankruptcy
A bankruptcy court weighs two things. First, it has to consider what will give vendors the most money back. In some cases, that could mean working to keep some stores open.
The courts also have to consider the needs of the employees and to a lesser extent customers. When David’s Bridal was rescued during its Chapter 11 bankruptcy, the judge cited the impact on thousands of brides as a factor.
In most cases, however, the most money is returned by selling off the company for parts. That includes selling inventory through going-out-of-business sales and auctioning off leases, company, property, intellectual property, like the brand name and the website, and anything else that can be monetized.
More bankruptcy:
- Popular breakfast dining chain files for Chapter 11 bankruptcy
- Huge national car wash chain files Chapter 11 bankruptcy
- Troubled trucking company files for Chapter 11 bankruptcy
Joann has entered that phase of its Chapter 11 bankruptcy.
As its locations wrap up their final sales, the fate of those stores has become known. That does not fully remove the possibility of a revival, but it makes much less likely a rescue on a national scale or a surviving company similar to the one people have come to love.
Joann stores are being sold off
GA Group, a provider of asset disposition, valuation, appraisal and real estate services, and A&G Real Estate Partners, a national real estate adviser, have agreed to auction 790 retail-store leases and five distribution centers tied to the wind-down of operations of Joann after the company filed Chapter 11 bankruptcy on Jan. 15, 2025.
That’s not a fairytale ending and it’s not one that crafters and other fans of the brand were hoping for.
The deadline for bids on Joann store leases and properties is April 16 and the auction is expected to take place in New York on April 22.
The available leases cover a range of property types across 49 states, including freestanding stores, power centers, strip malls, and urban retail corridors, ranging from 7,500 to 52,000 square feet. No fee-owned properties are available in the auction.
Related: Award-winning cosmetics brand files for Chapter 11 bankruptcy
“This diverse portfolio offers strong real estate fundamentals, prime high-traffic locations, and turnkey spaces ready for immediate occupancy,” said Michael Jerbich of GA Group.
“This auction offers business owners and investors a prime opportunity to expand their footprint and strengthen their local presence.”
Most Joann stores will stay open for going-out-of-business sales through May or until supplies run out. Furniture, fixtures and equipment are also available for purchase. The retailer’s intellectual property will also be sold as part of this process.
