THE crafts retailer Jo-Ann has filed its second bankruptcy in one year, reports say.
Bosses are scrambling to reverse the downturn in sales and are working to drive growth in the company, which has a presence in 49 US states.
The crafts retailer Jo-Ann has filed for bankruptcy again[/caption]
Execs said the bankruptcy motion was filed in a bid to ensure the company’s value could be maximized, per a statement.
The company is among the retailers struggling with a downturn in sales.
Bosses have stressed that stores will remain open and customers will not see any change.
JoAnn has a network of more than 800 stores.
Michael Prendergast, the interim CEO, admitted that the company had faced several challenges.
“After carefully reviewing all available strategic paths, we have determined that initiating a court-supervised sale process is the best course of action to maximize the value of the business,” he said.
“We hope that this process enables us to find a path that would allow JoAnn to continue operating as a going concern.”
Prendergast said the company remains committed to its loyal fanbase.
JoAnn has been part of the American retail scene since 1943 and the company was founded in Cleveland, Ohio.
The company previously entered bankruptcy in March as part of its overhaul.
The process was completed within a 40-day window.
This was something that Chris DiTullio, the company’s interim CEO at the time, hailed.
Bosses revealed that they planned to cut the company’s debt by over $500 million when they started the bankruptcy proceeding.
Jo-Ann bosses have been fighting to keep the company afloat at a time when shoppers have seen their wallets squeezed.
Americans have been grappling with high inflation and high interest rates.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can’t repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.
In the summer of 2022, inflation hit a 40-year high of 9.1%.
Jo-Ann is not the only retailer that has filed for bankruptcy.
Party City is winding down its operations after announcing that all stores would close.
Most locations are set to close by February 28, according to CNN.
Chiefs are rushing to clear the last remaining stock, and auctions are being held.
Barry Litwin, the company’s CEO, told workers that the decision to file for bankruptcy was “tough.”
Jo-Ann stores are not at risk, according to company bosses[/caption]
