Home crafts specialist Joann has initiated a voluntary prepackaged Chapter 11 filing with the United States Bankruptcy Court for the District of Delaware and has a transaction support agreement in place.
According to Joann, the company made the bankruptcy move with significant stakeholder support. It expects to complete the bankruptcy process on an expedited basis, which could mean as early as late April. At that point, Joann stated, it expects to become a private company owned by certain lenders and industry parties.
The transaction support agreement, which it maintained is supported by a majority of its financial stakeholders and additional industry financing parties, is set to strengthen the company’s financial position. In connection with the TSA, Joann has received commitments for $132 million in new financing and related financial accommodations and expects to reduce funded debt on its balance sheet by $505 million. The parties have agreed to a six-month extension of the company’s existing ABL and FILO credit facilities, effective upon Joann’s emergence from the court-supervised bankruptcy process. Under the TSA and related transaction documents, Joann will maintain all obligations to employees, vendors, landlords and other trade creditors. As such, they would be paid or otherwise satisfied in full with obligations honored in the ordinary course of business.
“Over the past several months, Joann has made meaningful business improvements through the execution of our Focus, Simplify and Grow cost reduction initiative,” said Chris DiTullio, chief customer officer and co-lead of the interim office of the CEO. “We are excited by our progress on both top and bottom-line initiatives in the past year and are confident the steps we are taking will allow Joann to drive long-term growth. We appreciate the support from our financial and industry stakeholders in this agreement, and their confidence in our ability to continue driving positive business change. There is no other retailer with the same ability to serve sewists, quilters, crocheters, crafters and other creative enthusiasts as we have for the past 80 years, and we take great pride in seeing the passion and engagement of our millions of customers and our team members.”
Scott Sekella, Joann’s CFO and co-lead of the interim office of the CEO, added, “This agreement is a significant step forward in addressing Joann’s capital structure needs, and it will provide us with the financial resources and flexibility necessary to continue to deliver best-in-class product assortments and enhance the customer experience wherever they are shopping with us. This includes our more than 800 stores across the United States, 95% of which are cash flow positive. We remain committed to our suppliers, partners, team members and other stakeholders and are focused on ensuring we continue to operate as usual so we can continue to best serve our millions of customers nationwide.”
