The US has been hit with a spate of bankruptcy in the past years. Now, Joann, a popular craft store, is facing bankruptcy following a number of mistakes.
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The craft store, which operated in most states in the US, chose to try and weather the post-pandemic storm, refusing to close up stores. Joann had already filed for Chapter 11 bankruptcy but chose to keep most of their shop fronts open. They continued with many expensive leases and believed they would be able to pull back lost profits.
However, now, Joann is having to file for bankruptcy for the second time. This will possibly result in many of their 800 stores being shut forever. The Head of Debtwire spoke about their unwise decisions since their previous bankruptcy. "Joann kept all locations open after their last bankruptcy, which is the opposite of what a retailer is supposed to do. You must reject leases from unprofitable locations and downsize. They didn't, and now they are going to liquidate," he revealed.
The situation has arisen from a lot of bad financial decisions. Chapter 11 bankruptcy, which Joann originally filed for, is usually a way to fix a failing business. However, the efforts have been in vain.
Joann Filed For Bankruptcy Amid Millions Of Dollars of Debt
Despite being in Chapter 11 bankruptcy proceedings, the craft store was unable to pull itself from the pit. The manager of GlobalData revealed just how bad it was for the company.
"With $615.7 million of debt as well as $133 million of trade debt outstanding, Joann did not have room for the problems that have plagued it over the past year. Unless it can find a buyer for the business, its future now looks very uncertain." At the moment, the jury is out on whether it will still be standing months from now.
Now, the 800 craft stores across the US face closure. Unless an investor is looking to buy the failing craft store, the shop will be gone forever. This will leave many people across the country out of a job, with yet another high street staple in the dust.
