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Fabrics and crafts retailer Joann Inc. filed for Chapter 11 protection in Delaware bankruptcy court on Wednesday, marking its second filing in less than a year. The company, based in Hudson, Ohio, is facing $615.7 million in debt, with plans to sell its assets to resolve financial challenges.

Joann's interim CEO, Michael Prendergast, explained in a first-day declaration that the company encountered unexpected inventory issues following its previous bankruptcy exit in April. These complications, combined with a slow retail economy, left Joann in an "untenable debt position."

The company entered this bankruptcy with $615.7 million in debt, including $352.4 million in revolving credit and other obligations. Joann has secured a stalking horse bid from Gordon Brothers Retail Partners, which will establish a baseline price for the sale of its assets.

Joann had previously sought Chapter 11 protection in March, restructuring to reduce its debt by $505 million. After receiving approval for a prepackaged restructuring plan in April, Joann was able to refinance loans and retain control under its creditors, keeping over 800 retail locations open.

However, after emerging from bankruptcy, Joann struggled to cope with inflation, rising interest rates, and declining consumer spending, which further pressured its profit margins. Additionally, supply chain issues caused key vendors to halt production of items Joann relied on, leading to inventory shortages. By last summer, in-stock levels had dropped below 90%, the lowest in over a decade, affecting customer satisfaction and sales.

Joann intends to continue working with Centerview Partners on a marketing process for its assets and secure enough liquidity to continue operating during the bankruptcy. A first-day hearing is scheduled for Thursday at 3 p.m. EST.

The company is represented by Kirkland & Ellis LLP and Cole Schotz PC in the case, titled In re: Joann Inc., case number 1:25-bk-10068, in the U.S. Bankruptcy Court for the District of Delaware.