Oaktree-Backed GA Group, Lenders Win Auction for Bankrupt Joann

The bankruptcy saga of Joann, the nation's leading craft and sewing retailer, has reached a turning point as Oaktree Capital Management-backed GA Group, along with the retailer's lenders, emerged victorious in a court-supervised auction. The winning bid, which includes cash consideration and a credit bid, aims to maximize the value of Joann's operations and address the company's debt obligations.

GA Group, in partnership with Wilmington Savings Fund Society, the Prepetition Term Loan Agent, submitted the winning bid to acquire substantially all of JOANN’s assets. The bid structure addresses Joann's financial challenges by providing full repayment to secured creditors and offering a credit bid against the Term Loan Facility. This approach ensures that Joann's creditors, particularly the secured ones, are paid in full, which is crucial for maximizing the company's value.

The winning bid includes cash sufficient to repay the Prepetition ABL and FILO (~$462.3 million), plus a $105 million credit bid against the $153.4 million Term Loan Facility. This combination of cash consideration and credit bid addresses Joann's debt obligations and provides value for creditors and stakeholders. The cash consideration ensures that secured creditors receive full payment for their claims, while the credit bid maximizes the value that can be distributed to other stakeholders, such as unsecured creditors and customers.

GA Group's strategic plans for Joann's operations include closing approximately 500 stores across the nation. This right-sizing of the store footprint is a critical part of their efforts to ensure the best path forward for Joann. The closure of these stores will help reduce overhead costs and improve the company's financial health. Additionally, GA Group plans to conduct going-out-of-business sales at all store locations, which will help liquidate Joann's inventory and generate revenue to pay off creditors and maximize the value of the business.

The winning bid structure, combined with GA Group's strategic plans, aims to maximize the value of Joann's operations by reducing costs, generating revenue through liquidation sales, and ensuring that creditors are paid in full. By following these plans, GA Group hopes to create the best possible outcome for all stakeholders involved in the bankruptcy process.

The approval of the sale by the Bankruptcy Court is scheduled for February 26, 2025, at 5:00 p.m. (ET). If approved, GA Group will proceed with winding down Joann's operations, closing stores, liquidating inventory, and settling with creditors. This process will maximize the value of the business by efficiently managing the liquidation process and providing an opportunity for customers to purchase Joann's inventory at reduced prices.

In conclusion, the winning bid by Oaktree-backed GA Group and Joann's lenders addresses the company's debt obligations and provides value for creditors and stakeholders. The strategic plans for Joann's operations, including store closures and going-out-of-business sales, aim to maximize the company's value and create the best possible outcome for all stakeholders involved in the bankruptcy process.