Joann Inc. nears answer on whether Gordon Brothers firm will win 'stalking horse' bid
Joann Inc. on Tuesday awaited word on how many parties are interested in taking control of the fabrics and crafts retailer as an extension granted Friday in bankruptcy court was set to expire.
Potential bidders had until 5 p.m. EST to signal their interest in the Hudson company. According to a revised schedule approved Friday by the U.S. Bankruptcy Court in Delaware, notice of a winning suitor could be issued Wednesday if bids do not meet the threshold for an auction. If an auction is warranted, it would be conducted at 10 a.m. Friday.
When Joann filed for Chapter 11 bankruptcy on Jan. 15, it identified the firm Gordon Brothers Retail Partners as the "stalking horse' bidder," the party that stands ready to assume ownership if other potential avenues to exit bankruptcy fail.
Where does the term 'stalking horse' come from?
The term "stalking horse" refers to "either a real horse or animal- like screen" that a hunter would hide behind to move in on prey, according to a post on the website of mergers and acquisitions adviser firm Zachary Scott.
What does Gordon Brothers do?
Gordon Brothers, the stalking horse bidder named in Joann bankruptcy filings and the craft retailer's Jan. 15 news release, is an investment firm.
Boston-based Gordon Brothers has relationships with private equity funds, Doron Narotzki, University of Akron associate professor of accounting, previously told the Beacon Journal.
If Gordon Brothers buys Joann, it could break it up and sell its tangible and intangible assets for parts, Narotzki said, adding that this would be in line with Gordon Brothers' methods in past acquisitions.
Amid bankruptcy proceedings and pre-sale, Joann has already announced the closure of about 500 of its roughly 850 stores, including 33 in Ohio, and has started going-out-of-business sales. What will happen with the rest of its assets remains to be seen.
Is a 'stalking horse' bid common in bankruptcies?
Large companies undergoing Chapter 11 bankruptcies often try to work with a stalking horse, said SC&H Group, a management and consulting services company, in a blog post.
Patrick Williams covers growth and development for the Akron Beacon Journal. He can be reached by email at pwilliams@gannett.com or on X, formerly known as Twitter, @pwilliamsOH.