Fabric and crafts retailer Joann Inc. filed for bankruptcy, unable to sustain its debt load after a sales boom during pandemic lockdowns faded.

The Hudson, Ohio-based chain will be delisted after the bankruptcy proceedings and be privately owned by “certain of its lenders and industry parties,” according to a company statement released as it filed a Chapter 11 petition in Delaware early Monday. The filing listed liabilities of $1 billion to $10 billion.

Joann’s lenders struck a restructuring deal to provide about $132 million in new financing that would help the company reduce debt by about $505 million, the firm said. The parties in the deal also agreed to a six-month extension of certain loans and credit facilities. 

The company’s shares dropped to an all-time low of about 18 cents on Monday. They shot as high as 42 cents during pre-market trading before retreating.  

Like many of its retail peers, Joann had been contending with changing consumer shopping habits and years of declining revenues. The pandemic was a brief bright spot for the company, as cooped-up consumers boosted spending on at-home activities like crafting. 

In an environment of relatively high interest rates and inflation, consumer discretionary companies have borne the brunt of the changing trend. They led all sectors in US corporate bankruptcy filings last year, which reached the highest since 2010, according to S&P Global.

In Joann’s “pre-packaged” bankruptcy court filing — in which restructuring terms are largely settled with creditors — the company also listed assets worth $500 million to $1 billion. Craft yarn provider Spinrite Corp. was listed as its largest unsecured creditor. 

The company aims to complete the restructuring as early as next month. Joann stores — which total about 850 nationwide — and JOANN.com will continue to operate normally, according to the statement. “Customers, vendors, landlords, and other trade creditors will not see any disruption in services,” it said.  

“This agreement is a significant step forward in addressing Joann’s capital structure needs,” Scott Sekella, chief financial officer and co-lead of the interim office of the CEO, said in the statement.

The retail chain cut its debt load in an out-of-court deal in 2020, but later struggled to contend with supply chain problems and inflation that led consumers to cut back on discretionary activities. Much of its debt load is also in floating rates, leaving the company saddled with higher interest costs in recent years. 

The case is JOANN Inc., 24-10418, US Bankruptcy Court for the District of Delaware.