Retail chains that run out of money rarely get a happy ending. Instead, they die a bunch of slow deaths as efforts to save the company become more and more futile.
At first, you get the inevitable changed, marketing, and other efforts to bring in more customers. Those efforts rarely have enough money behind them to actually have an impact, which changes the fate of the company.
Related: Another popular beauty brand files Chapter 11 bankruptcy
Somewhere in there, you get leader, ship changes, and bringing in people who have turned around other brands. Unless that comes with a big infusion of cash, that’s almost never successful either.
Finally, you get the bankruptcy filing. In rare cases, that gives a company a chance to reorganize, get its debt under control, and reemerge with a workable balance sheet.
The problem is that right now, money is very expensive. That means that unless vendors and landlords offer very good terms, chances are a Chapter 11 bankruptcy filing, even a successful one, it’s just one last gasp in a sad death march.
We have recently seen chains like Party City, and now, Joann fabrics emerge from Chapter 11 and tout their great futures. In reality, these chains come out of Chapter 11 barely able to operate and very little room for error.
In many cases, if customers don’t come roaring back, there is another filing, which usually leads to a liquidation. That is what is happening at Joann, a chain that filed Chapter 11 bankruptcy, emerged from it, and then plunged almost immediately back in.
Joann has already shared that it’s closing all of its stores, but we have seen cases like with Big Lots where closing does not mean the end. For a company that has a very devoted audience, there has always been a chance that a white night might emerge.
The latest news, however, suggests that there will be no happy ending for fans of the fabric retailer.
Going-out-of-business sales often involve selling down to the studs.
Image source: TheStreet
Joann enters a dark part of Chapter 11 bankruptcy
A bankruptcy court weighs two things. First, it has to consider what will give vendors the most money back. In some cases, that could mean working to keep some stores open.
The courts also have to consider the needs of the employees and to a lesser extent customers. When David’s bridal was rescued during its Chapter 11 bankruptcy, the judge cited the impact on thousands of brides as a factor.
In most cases, however, the most money is returned by selling off the company for parts. That includes selling inventory through going out of business sales, and auctioning off leases, company, property, intellectual property, like the brand name and the website, and anything else that could be monetized.
More bankruptcy:
Popular breakfast dining chain files for Chapter 11 bankruptcyHuge national car wash chain files Chapter 11 bankruptcyTroubled trucking company files for Chapter 11 bankruptcy
Joann has entered that phase of its Chapter 11 bankruptcy.
As its locations wrap up their final sales, the fate of those stores has become known. That is not fully remove the possibility of a revival, but it makes it much less likely that it will happen on a national scale, or look anything like the company people have come to love.
Joann stores being sold off
GA Group, a leading asset disposition, valuation, appraisal, and real estate services firm, and A&G Real Estate Partners, a national real estate advisory firm specializing in lease optimization and real estate sales, have signed to auction 790 retail store leases and five distribution centers in conjunction with the wind down of operations of fabric and crafts retailer, Joann following its filing for Chapter 11 bankruptcy on January 15, 2025.
That’s not a fairytale ending and it’s not one that crafters and other fans of the brand were hoping for.
The bid deadline for Joann store leases and properties is April 16, 2025 and the auction is expected to take place in New York on April 22, 2025.
The available leases cover a range of property types across 49 states, including freestanding stores, power centers, strip malls, and urban retail corridors, ranging from 7,500 to 52,000 square feet. No fee-owned properties are available in the auction.
Related: Award-winning cosmetics brand files for Chapter 11 bankruptcy
“This diverse portfolio offers strong real estate fundamentals, prime high-traffic locations, and turnkey spaces ready for immediate occupancy,” said Michael Jerbich of GA Group. “This auction offers business owners and investors a prime opportunity to expand their footprint and strengthen their local presence.”
Most Joann stores will stay open for going-out-of-business sales through May 2025, or until supplies run out. Furniture, fixtures, and equipment are also available for purchase. The retailer’s intellectual property will also be sold as part of this process.
