JOANN: Craft Retailer Files Second Bankruptcy, Closes All 800 Stores

JOANN Inc. returned to chapter 11 on January 15, 2025, starting a second bankruptcy case less than a year after emerging from its 2024 restructuring. The amended disclosure statement describes the 2025 filing as a continuation of a marketing process that led to a liquidation-oriented agency transaction and a wind-down plan, rather than a traditional operating reorganization. The amended disclosure statement also describes a large national footprint and a product mix that included fabrics, sewing machines, crafts, decor, and baking supplies, and it attributes the return to liquidity pressure tied to an outsized capital structure and a weak retail environment following the 2024 exit from court protection.

The 2025 case quickly moved from the petition date to a liquidation timetable. The company announced plans to close 500 stores in February 2025 and then shifted to a full liquidation of all remaining locations within weeks. The company later announced an intellectual property sale to SVP Sewing Brands LLC, an affiliate of The Michaels Companies, Inc., while the confirmed plan created a general unsecured creditor trust and a plan administrator to manage remaining claims and wind-down activities.

Debtor(s)	JOANN Inc. and affiliated debtors
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	25-10068
Judge	Hon. Craig T. Goldblatt
Petition Date	January 15, 2025
Confirmation Date	July 10, 2025
Total Debt	$615.7 million
Supplier Debt	$133 million
Inventory	$538.3 million
Monthly Rent	$26 million
Stores (pre-filing)	About 800 locations
Employees (pre-filing)	About 19,000
IP Buyer	SVP Sewing Brands LLC

Restructuring Overview

The confirmation order describes the petition date as January 15, 2025 and reflects a case that moved toward a liquidation-focused wind-down rather than a going-concern reorganization. The amended disclosure statement explains that the debtors sought chapter 11 protection to complete a marketing process and implement a liquidation transaction structured around an agency agreement, followed by a plan that would wind down remaining operations. That posture is consistent with the rapid shift from store closure announcements to full liquidation within weeks of the filing.

A sale motion filed in late May 2025 requested approval of a private sale process tied to the previously approved liquidation framework and asserted that no further auction was necessary because a prior market check had already occurred. The court later entered a sale order approving an intellectual property asset purchase agreement with SVP Sewing Brands LLC, and the plan was confirmed in July 2025. The plan established a wind-down structure with a plan administrator and a general unsecured creditor trust, setting a distribution waterfall and release provisions that would govern creditor recoveries.

The second bankruptcy came after a prior restructuring in early 2024. The company eliminated about $505 million of debt and emerged in April 2024, only to return to bankruptcy eight months later amid persistent operational and capital structure pressures. The 2025 case is therefore best understood as a chapter 11 wind-down following a short-lived restructuring, with value preservation centered on liquidation and the transfer of intellectual property rather than continued operations.

Company Background and Operating Footprint

The amended disclosure statement describes JOANN as a long-standing U.S. craft and fabric retailer with both online and brick-and-mortar operations. The company reported a product mix that includes fabrics, sewing machines, crafts, decor, and baking and cake decorating supplies, reflecting a wide assortment aimed at hobbyist and maker customers.

The size of the retail footprint and workforce defined the scale of the liquidation. JOANN operated more than 800 U.S. locations and employed about 19,000 people across all states except Hawaii at the time of the 2025 filing. That footprint also drove fixed costs, including roughly $26 million in monthly rent.

A simplified view of the product categories referenced in the amended disclosure statement is summarized below.

The scale of those operations meant that any restructuring outcome had to address inventory, vendor supply, and lease obligations across hundreds of locations. Inventory was about $538.3 million and supplier debt about $133 million, illustrating the working capital tied up in goods and vendor relationships.

Causes of Distress and Return to Court Protection

The amended disclosure statement attributed the 2025 filing to liquidity constraints tied to an outsized capital structure and operating cost burden, compounded by a sluggish retail economy after the 2024 emergence. That framing indicates the company viewed the post-emergence environment as insufficient to support its debt load and operating costs, even after the 2024 restructuring.

Vendor and supply chain issues also played a role in the decline. Suppliers eliminated key products that JOANN relied on, and deliveries of yarn and sewing items became unpredictable, undermining the retailer's reputation as an all-in-one destination for sewing and craft supplies. The amended disclosure statement similarly referenced an unexpected ramp down in the production of critical products and acute inventory challenges, which limited the company's ability to stock shelves and meet demand.

The combination of heavy fixed costs, reduced product availability, and weaker consumer demand left limited options for a turnaround. The amended disclosure statement noted that the company entered the 2025 case to complete a marketing process and implement a liquidation transaction, which suggests management and stakeholders concluded that a sale and wind-down would preserve more value than continued operations.

Liquidation Strategy and Store Closures

The liquidation strategy unfolded quickly after the filing. The company announced plans to close 500 of its roughly 800 stores on February 12, 2025. The highest number of planned closures were in California, Florida, Pennsylvania, Ohio, and Michigan, indicating that the footprint reduction was broad rather than limited to one region.

Within weeks, the strategy shifted to a full liquidation. JOANN planned to liquidate all remaining stores in a matter of weeks. A court-approved motion allowed the company to begin the initial store closures, signaling that the liquidation process had judicial authorization and an operational timeline.

The company had more than 800 locations at the time of the filing and employed about 19,000 people, placing the liquidation among the larger retail closures in 2025. All stores were closed by May 30, 2025, underscoring how quickly the liquidation moved after the petition date.

The liquidation approach also aligned with the amended disclosure statement's description of a marketing process tied to an agency agreement and wind-down plan. Instead of a prolonged attempt to reorganize the operating business, the case progressed toward asset monetization, store closures, and a plan that governed how proceeds would be distributed to creditors.

Prior Restructuring and Second Filing Context

JOANN's 2025 filing came shortly after a prior restructuring. The company eliminated about $505 million of debt and emerged in April 2024, only to return to court protection roughly eight months later. The amended disclosure statement similarly noted that the company filed chapter 11 in early 2024 and emerged in April 2024, but the post-emergence environment and capital structure left it unable to stabilize operations.

The speed of the return to bankruptcy highlights how quickly the operating environment deteriorated after the first case. A retailer that exits chapter 11 typically relies on stable inventory flows, vendor confidence, and enough liquidity to rebuild working capital. JOANN's second filing indicates that those conditions were not met and that the company could not maintain adequate product availability or cash flow under the remaining debt burden. The 2025 filing therefore served as a second attempt to address structural issues, but with a different objective: a liquidation-focused wind-down rather than a recapitalized operating company.

This context matters because the 2025 case involved a decision to liquidate rather than attempt another operating turnaround. The amended disclosure statement described the filing as a necessary step to complete a marketing process and implement a liquidation transaction, which suggests stakeholders viewed a sale and wind-down as the most practical way to preserve value. The combination of a recent emergence, a short return to distress, and a shift to liquidation framed the case as a rapid transition from restructuring to exit.

Marketing Process and Agency Liquidation Transaction

The amended disclosure statement explained that the chapter 11 filing was intended to complete a marketing process tied to a liquidation-oriented agency transaction. In that framework, the debtors did not pursue a broad auction process for the operating business. Instead, the marketing process culminated in an agency agreement designed to monetize inventory and assets through a controlled wind-down while protecting value for stakeholders. The amended disclosure statement characterized the liquidation transaction as the central objective of the case, indicating that the debtors sought court approval to implement it rather than to reorganize the retail operations.

The sale motion filed in late May 2025 reinforces that narrative. The motion said the sale reflected a fair and open process under earlier bidding procedures and was negotiated in good faith, which the debtors argued supported approval without reopening bidding. That language is typical in a liquidation case where stakeholders seek to avoid delay and preserve value through a streamlined approval process. The debtors described the sale process as a private sale tied to the previously approved agency liquidation transaction and argued that a further auction was unnecessary because a market check had already occurred. The motion emphasized that the transaction reflected a fair process and that the sale should be approved without reopening bidding, which is consistent with a case structured around a single liquidation pathway rather than competing going-concern bids.

This approach reduced the time the estate spent in an uncertain marketing phase. A typical retail chapter 11 might run a broad auction for stores or business lines, but the agency liquidation transaction suggests a different path: monetize inventory, sell intellectual property, and wind down. The amended disclosure statement therefore positioned the case as a controlled liquidation intended to preserve value through orderly disposition rather than a contested sale process.

Lease Burden, Inventory, and Vendor Exposure

The scale of JOANN's lease and inventory obligations provides a snapshot of the fixed costs and working capital pressures that shaped the case. The company carried roughly $26 million in monthly rent costs, reflecting hundreds of leases across the country. That level of rent is a significant monthly cash requirement even before payroll, logistics, and inventory purchasing, and it created a high fixed-cost baseline during a period of weak retail demand.

Inventory was also substantial. Inventory was about $538.3 million and supplier debt about $133 million, showing how much of the business was tied to vendor relationships and stock availability. When vendors limited product availability or shifted payment terms, the company faced both higher working capital demands and shortages in key categories. The amended disclosure statement referenced an unexpected ramp down in production of critical products and acute inventory issues, indicating that supply constraints were not isolated incidents but systemic challenges that affected the ability to operate the store network.

The fixed-cost structure and inventory exposure are summarized below.

Those figures help explain why the case pivoted quickly to liquidation. Even modest declines in sales or disruptions in vendor supply would have had a large impact on liquidity given the fixed rent burden and the need to fund inventory purchases. The amended disclosure statement's emphasis on liquidity constraints and a heavy capital structure aligns with those pressures.

Geographic Concentration of Store Closures

The initial store closure plan provided insight into how the liquidation would unfold across the country. JOANN planned to close 500 stores, with the largest number of closures in California, Florida, Pennsylvania, Ohio, and Michigan. Those states include both large population centers and regions where JOANN historically maintained a strong presence, indicating that the closures were designed to shrink the overall footprint rather than target a single weak region.

The subsequent decision to liquidate all stores meant that these initial state-level closure counts became an early indicator rather than a final plan. Still, the distribution highlights how the footprint was spread across multiple regions, making the liquidation a nationwide event rather than a localized retrenchment. That nationwide scope also helps explain the scale of lease obligations and the complexity of an orderly wind-down for the estate.

Workforce and Store Footprint Implications

JOANN's liquidation affected a large national workforce and store base. The company employed about 19,000 people and operated more than 800 stores across the United States at the time of the 2025 filing. The company initially planned to close 500 stores, which would have removed more than half of the footprint before the subsequent decision to liquidate all locations. The scale of those numbers indicates that the liquidation was not a localized retrenchment but a nationwide wind-down.

The closure timeline also shows how quickly the footprint contracted. The initial store closure plan was announced in mid-February, followed within weeks by a full liquidation announcement that contemplated closing all remaining stores in a matter of weeks full liquidation. A court-approved motion allowed the company to begin closures, indicating that judicial authorization supported the rapid pace of store shutdowns.

These metrics contextualize the liquidation strategy described in the amended disclosure statement. The company noted that the 2025 filing was intended to complete a marketing process and implement the liquidation transaction, which meant that the workforce and store base would be reduced through an orderly wind-down rather than an operating turnaround. The timeline indicates that the liquidation progressed rapidly from an initial plan to close 500 stores to a full exit from physical retail within the same quarter.

Intellectual Property Sale to Michaels Affiliate

A key value realization step was the intellectual property sale to SVP Sewing Brands LLC, an affiliate of The Michaels Companies, Inc. The Order Approving IP Asset Sale approved an intellectual property asset purchase agreement and authorized the transfer of specified assets free and clear of liens and claims. The order identified the buyer as SVP Sewing Brands LLC, indicating that the brand assets were acquired by a specialized entity within the Michaels corporate structure rather than by a new operating retailer.

Press coverage provides more detail on the scope of that transaction. Michaels completed the acquisition of JOANN intellectual property and private label brands, including the Big Twist yarn product family and related sub-brands such as Value Plus, Twinkle, Posh, and Baby Bear. The acquisition covered more than 600 products across fabric, quilting, sewing, and yarn categories, and the transaction did not include stores. Chain Store Age described the deal as a way for Michaels to expand its crafting supply offerings.

The acquired intellectual property included JOANN's private label yarn and craft brands. The Big Twist family included Value Plus, Twinkle, Posh, and Baby Bear, and the acquisition covered more than 600 products across fabric, quilting, sewing, and yarn categories. Those details indicate that the transaction focused on brand equity and proprietary product lines rather than real estate or store operations.

The purchase price was not disclosed in the sale order or the press releases, which leaves the transaction value opaque. That is not unusual for an intellectual property sale in a liquidation context, particularly when the transaction is part of a broader wind-down plan. The sale nevertheless preserved brand value for the buyer and created a pathway for continued use of the JOANN name and private label lines.

Michaels later signaled how it intended to use the JOANN brand. Michaels introduced a "Knit & Sew Shop" store-within-store concept featuring the JOANN name on signage, with the concept available in 840 Michaels stores and an additional 250 locations planned for expansion. That initiative underscores that the intellectual property sale allowed the brand to live on under a different retail operator, even as JOANN's own stores liquidated.

Plan Structure, GUC Trust, and Releases

The second amended joint chapter 11 plan established a wind-down structure centered on a plan administrator and a general unsecured creditor trust. The plan described Class A and Class B GUC trust interests and a distribution waterfall that would govern recoveries for general unsecured creditors. The confirmation order approved the plan and confirmed the release framework, including debtor releases, third-party releases on an opt-in basis, and exculpation provisions.

The confirmation order approved debtor releases and exculpation provisions as integral to the plan and confirmed opt-in third-party releases, which set the scope of liability protections for participating stakeholders. The order also included effective date provisions that govern assumption and rejection mechanics for executory contracts and leases, along with cure payment timing, indicating that contract treatment was a significant component of the wind-down process. These provisions matter in a retail case because lease rejections and contract assumptions can materially affect the cash available for distributions.

The plan framework indicates that the case transitioned from a liquidation process to a claims administration and distribution phase. The use of a GUC trust suggests that value distribution would occur through a trust vehicle rather than through ongoing debtor operations, and the plan administrator would manage remaining estate tasks, including claims reconciliation and potential litigation recoveries. Those mechanics are typical in a liquidation plan where the core operating business has been sold or shut down.

A summary of plan elements drawn from the docket is provided below.

The confirmation order also confirmed the petition date, reinforcing the case timeline and showing that the plan was approved about six months after the filing. That timeframe reflects a relatively short chapter 11 process for a retailer of JOANN's size, driven by the liquidation strategy and asset sales rather than a protracted restructuring of ongoing operations.

Key Timeline

Frequently Asked Questions

What business did JOANN operate before the 2025 filing?

JOANN operated a national craft and fabric retail business with online and brick-and-mortar channels, offering fabrics, sewing machines, crafts, decor, and baking supplies, as described in the amended disclosure statement.

Why did JOANN return to chapter 11 in 2025?

The amended disclosure statement cited liquidity constraints from an outsized capital structure and operating cost burden, along with a weak retail environment after the 2024 emergence, as reasons for the second filing.

What did the company report about supply chain issues?

Suppliers eliminated key products and deliveries of yarn and sewing items became unpredictable, contributing to inventory challenges that affected JOANN's ability to stock critical categories.

How did the store closure plan change during the case?

JOANN initially planned to close 500 stores, then announced full liquidation of all remaining locations within weeks.

Who bought JOANN's intellectual property?

SVP Sewing Brands LLC, an affiliate of The Michaels Companies, acquired JOANN's intellectual property and private label brands, including the Big Twist yarn family IP acquisition.

Did the buyer acquire JOANN stores?

No. The acquisition covered intellectual property and private label brands, and the press release stated that no physical JOANN locations were acquired IP acquisition.

What is the GUC trust in the confirmed plan?

The second amended plan created a general unsecured creditor trust with Class A and Class B trust interests and a distribution waterfall for general unsecured creditors.

Who is the claims agent for the JOANN 2025 case?

Kroll Restructuring Administration LLC serves as the claims and noticing agent for the post-effective date debtor. The firm maintains the official claims register and distributes case notices to creditors and parties in interest.

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