Joann Fabrics announced it would be closing more than 800 of its locations, weeks after announcing the closure of 500 stores. That includes the 36 remaining stores in Illinois.

Prior to the announcement, the fabrics and crafts company had planned to keep a fraction of its stores open, including 26 of its 36 remaining stores in Illinois. Now, Joann has been sold as the result of its second bankruptcy filing in less than a year to the GA Group along with its prepetition term lender.

The winning bidders plan to wind down Joann’s operations at all store locations, including the 36 locations in the state. “In connection with this agreement, subject to Bankruptcy Court approval of the transaction, the winning bidders plan to begin winding down the Company’s operations and conduct going-out-of-business sales at all store locations,” said Joann in a statement.

The Hudson, Ohio-based retailer filed for bankruptcy a year ago, aiming to restructure its ballooning debt. The company filed for bankruptcy again in January, reporting $615.7 million in debt.

Fabrics and crafts retailer Joann will close 500 of its 800 stores in the coming months as it goes through its second Chapter 11 bankruptcy, according to published reports. CNN reported that the closings cover all 50 states, with California, Florida, Indiana, Michigan, New York, Pennsylvania and Washington among those most heavily affected.

In its second bankruptcy filing last month, Joann cited inventory issues that were “acute and unexpected,” according to CNN. The company had previously revealed in court documents that it faced an “unexpected ramp-down, and, in some cases, the entire cessation of production” of some critical products.

The company also said it at the time it was looking for a buyer. Newly filed court documents reveal that as the “sale process progressed, and prospective bidders continued to conduct diligence and refine their potential bids, the debtors and their advisors were able to identify a subset of underperforming stores that are unlikely to be considered or included in any going concern bid.”

In all, more than 15,000 stores are projected to close across the U.S. this year, CNN reported, citing data from Coresight Research.

Nine months after emerging from bankruptcy, retailer Joann Inc. has commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware to facilitate a sale process to maximize the value of its business. The Hudson, OH-based company is seeking court approval to commence a process for the sale of substantially all its assets, with Gordon Brothers Retail Partners, LLC serving as the “stalking horse” bidder.

“Since becoming a private company in April, the board and management team have continued to execute on top- and bottom-line initiatives to manage costs and drive value,” said Michael Prendergast, interim CEO of Joann. “However, the past several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step.”

If other qualified bids are submitted during the court-supervised sale processes, the company plans to conduct an auction or auctions, with the stalking horse bid setting the floor.   

Kirkland & Ellis is serving as legal counsel to Joann, with Centerview Partners LLC serving as financial advisor and Alvarez & Marsal North America, LLC serving as restructuring advisor. The company operates more than 800 stores across 49 states. 

Marcus & Millichap Capital Corporation (MMCC) arranged $11,200,000 to refinance a JoAnn Fabrics and Crafts store located at 1000 S. Central Ave. in Glendale. Terms of the 10-year loan include a 5.97% interest rate with 30-years amortization and a 50% loan-to-value.

Ron Balys, SVP, capital markets based in MMCC’s Orange County office, secured the financing with a local credit union on behalf of a private client.

“We were able to work with a lender who understood JoAnn’s financial situation, which was imperative to the closing of this refinance,” said Balys. “JoAnn’s filed for bankruptcy the day before funding and the lender held their commitment to fund the loan. The property is located in the heart of Glendale, which has proven to be one of the strongest real estate markets in the country.”

How are deals getting financed in today’s uncertain climate? On May 1, Connect Los Angeles 2024 brings together John Manning of MMCC, Gary Bechtel of Red Oak Capital Holdings, Felix Gutnikov of Thorofare and TR Hazelrigg, IV of Avatar Financial Group on the Financing with Debt Panel. Register now to hear from these industry experts.