Joanne’s Bed and Back files Chapter 11, agrees to sell stores
April 10, 2008,
The retailer of specialty mattresses, adjustable beds and massage chairs said that to effect that transaction it had filed for Chapter 11 bankruptcy protection.
“We are saddened by this decision,” said Jon Studner, president of JoAnne’s Bed and Back Stores, “but I am excited to be able to announce the agreement with The Healthy Back Store which, if it proves to be the best offer, provides the possibility of strong continuity for our customers and employees.”
JoAnne’s has operated 16 stores in Maryland, Virginia and Washington, D.C. The Healthy Back, based in Springfield, Va., operates 18 stores in eight states, including Maryland and Virginia.
Studner said JoAnne’s had been beset by “a dramatic drop in sales levels,” which he attributed to the softening economy, weak consumer confidence, the housing slowdown and changing buying habits.
In conjunction with the filing, Studner said, an individual, whom he did not identify, has made available a $250,000 debtor-in-possession financing facility to enable JoAnne’s to continue to purchase inventory to run its business during the bankruptcy process, pending the sale.
The sale will be accomplished through a bankruptcy process that allows other interested bidders to make competing offers. Subject to the approval of the bankruptcy court and other conditions, the sale is expected to close in May.
JoAnne’s Bed and Back Stores has been a mainstay in the Washington market for almost 20 years, Studner said. He noted that the company aggressively explored other alternatives before signing the asset purchase agreement with The Healthy Back Store.
Studner said that 13 of JoAnne’s stores will remain open. Stores in Fairfax and Sterling, Va., and Timonium, Md., will close, he indicated.