Joann’s pre-packaged plan to cut $505 million in debt confirmed

By Sarah Lizee

Olympia, Wash., April 25 – Joann Inc. received confirmation of its pre-packaged Chapter 11 plan of reorganization from the U.S. Bankruptcy Court for the District of Delaware, according to a Thursday afternoon press release.

The plan aims to decrease the company’s debt by $505 million, as previously reported.

The company hopes to emerge from Chapter 11 in the coming days.

In March, Joann entered into a transaction support agreement with a majority of its financial stakeholders and additional industry financing parties to strengthen its financial position.

The TSA provides for up to $142 million in additional financing through a debtor-in-possession-to-exit facility, which, together with any payable-in-kind interest, will convert into committed exit financing at emergence.

The TSA also provides for the refinancing or assumption and continuation of the company’s asset-based lending facility and first-in, last-out term loan facility, and the equitization of the company’s prepetition term loan debt.

The TSA calls for payment or satisfaction in full and in the ordinary course of all general unsecured creditors under the plan, although two vendors will have a portion of their general unsecured claims converted into DIP term loans.

The company said it believes the transactions will position it for long-term viability as a going concern.

Joann’s prepetition term loan lenders will receive any remaining new equity of reorganized Joann under the plan, after dilution by the DIP participation fee, the management incentive plan and new equity interests to be issued to additional financing parties.

The prepetition term loan lenders are being offered the right to participate on a pro rata basis in the super-priority DIP-to-exit term loan facility, comprising backstopped DIP term loans in an aggregate principal amount of $107 million to $117 million – $107 million of committed funding and a $10 million uncommitted accordion facility.

All obligations to employees, vendors, landlords, and other trade creditors will be paid or otherwise satisfied in full and honored in the ordinary course of business.

The company’s 800-plus stores and website remained open and continued operating as normal during the process.

Joann is a Hudson, Ohio-based retailer of fabrics and crafts. The company filed bankruptcy on March 15 under Chapter 11 case number 24-10418.

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