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Judge Goldblatt held that certain claims against JOANN’s directors and officers belong to creditors rather than the bankruptcy estate, according to Restructuring GlobalView. JOANN had argued the claims were estate property under the Third Circuit’s Whittaker, Clark & Daniels framework, but the court focused on the elements of the Ohio-law claims asserted rather than the overlap in underlying facts, and treated the claims as direct creditor claims rather than derivative estate claims.
The ruling matters because D&O litigation value is not automatically available to fund a debtor-controlled plan or estate recovery pool simply because the alleged misconduct also harmed the company. For creditors tracking post-confirmation recoveries or claim-control disputes, the decision narrows JOANN’s ability to centralize those claims and preserves creditor-side leverage over at least some director-and-officer causes of action.
JOANN is moving to close all store locations after GA Group and the retailer's term lenders won the bankruptcy auction, expanding the wind-down from roughly 500 stores to the entire chain, according to USA Today's Feb. 24 report. Going-out-of-business sales that had started at the initial closing stores are being rolled out across all locations, turning the second Chapter 11 into a liquidation of the operating footprint rather than a going-concern rescue.
That reverses the premise of the 2024 case. The court confirmed JOANN's prepackaged plan in April 2024, authorizing exit facilities and new equity for the reorganized debtors under the Confirmation Order. The 2024 case was then closed in July as fully administered under the Final Decree. For restructuring professionals, the live issue has shifted from post-emergence cleanup to asset-sale execution, liquidation timing, gift-card/customer obligations, and recoveries in the 2025 case.
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