(Bloomberg) -- Crafts retailer Joann Inc. is considering a bankruptcy filing as soon as next week as part of a deal that would hand control of the company to lenders while allowing it to shed expensive debt, according to people with knowledge of the matter. 

The company, which sells fabric and craft supplies and has around 850 stores in the US, has been holding confidential talks with its lenders as it seeks fresh capital to bolster its cash reserves. 

Discussions are ongoing and plans aren’t final, but the company is seeking to line up enough support from lenders that would allow it to exit Chapter 11 quickly in what’s known as a pre-pack filing, the people said. Chapter 11 bankruptcies allow a company to continue operating while it works out a plan to repay creditors.

A representative for Joann didn’t immediately respond to a request for comment outside of normal business hours. 

Joann has struggled to maintain liquidity and manage inventory levels amid a challenging environment for retailers. It raised more than $34 million in a sale and leaseback deal for its Hudson, Ohio facility, but is contending with high interest expenses and required term loan payments, Moody’s Investors Service wrote in a note in January.  

The company has been getting advice from Houlihan Lokey Inc., while a group of lenders retained Lazard Inc. and Gibson Dunn & Crutcher, Bloomberg News previously reported. 

Representatives for Houlihan Lokey and Gibson Dunn didn’t immediately comment while a spokesperson for Lazard declined to comment. 

The company’s term loan due 2028 is quoted at less than 10 cents on the dollar, according to data compiled by Bloomberg. Its shares have lost 85% of their value in the last year, closing Friday at around 51 cents. 

Joann is among a slew of retailers that have been scrambling to shore up their finances in recent weeks. Apparel retailer The Children’s Place Inc. received new financing from Mithaq Capital after the Saudi family investment firm took over the company. Meanwhile, Express Inc. has been discussing restructuring options with lenders and off-price home retailer Big Lots Inc. has been seeking fresh cash.

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