JOANN Inc., the fabric and craft retailer currently operating under Chapter 11 protection, has filed a motion seeking court approval to sell its "Ditto" pattern technology business to Singer Sourcing Limited LLC for consideration that includes an $800,000 cash payment and waiver of certain priority claims against the bankrupt estate.
The proposed transaction, filed with the U.S. Bankruptcy Court for the District of Delaware on May 30, 2025, would transfer JOANN's digital sewing pattern projection technology and associated intellectual property to Singer, a company connected to the iconic sewing machine brand. The sale represents a strategic divestiture of a specialized technology asset as JOANN continues to navigate its bankruptcy proceedings.
"The proposed Sale is merely an extension of the transaction approved in the Approval Order after a robust auction process," the filing states, referring to a February 26 court order that authorized GA Joann Retail Partnership, LLC to serve as agent for selling the company's assets.
The assets being sold include patents, trademarks, and domain names associated with "Ditto" technology, which appears to be a system for projecting sewing patterns onto fabric. Also included in the transaction are social media accounts, specialized software, digital pattern assets, customer subscription data, and certain contracts related to the Ditto business.
According to the declaration of Steven Smith, Executive Vice President of Financial Operations of GA Retail Solutions (an affiliate of the agent handling the sale), the transaction will provide "additional benefits to the Debtors' estates beyond the consideration already paid pursuant to the Approval Order." Specifically, affiliates of Singer will waive certain priority claims against JOANN, including claims entitled to administrative expense priority under section 503(b)(9) of the Bankruptcy Code.
This waiver of priority claims could benefit JOANN's unsecured creditors, as the court's previous approval order allocates 50% of "503(b)(9) Savings" for the benefit of unsecured creditors. The motion notes that Singer will retain only a single general unsecured claim in the amount of $8,010,104.77 against Jo-Ann Stores, LLC.
Singer's acquisition of the Ditto technology appears strategically aligned with its core business in the sewing industry. The technology includes patented methods for projecting sewing patterns onto fabric and formatting sewing patterns for paperless use, potentially complementing Singer's sewing machine offerings.
JOANN and twelve affiliated entities filed for Chapter 11 bankruptcy protection on January 15, 2025, in the Delaware bankruptcy court. The case is being jointly administered under lead Case No. 25-10068, with Chief Judge Craig T. Goldblatt presiding.
The court has scheduled a hearing on the motion for June 23, 2025, with objections due by June 13. The sale is expected to close immediately after court approval, contingent on a waiver of the standard 14-day stay period normally applicable to asset sales in bankruptcy.
The debtors are represented by Cole Schotz P.C. and Kirkland & Ellis LLP. The official committee of unsecured creditors was appointed on January 28.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 124 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.