Francesca's files Chapter 11 with plans to sell company

Francesca’s Holdings Corp. has filed for filed for Chapter 11 bankruptcy protection, the latest apparel retailer whose business has been undone amid the pandemic.

Francesca’s filed with an intention to  sell its business. The investment firm TerraMar Capital LLC or an affiliate has agreed to become the stalking-horse bidder in a bankruptcy auction, according to a statement by Francesca’s. Other potential bidders are studying the company.

Francesca’s existing lender, Tiger Finance, has committed to provide $25 million in debtor-in-possession financing. 

The filing was not unexpected. In November, Francesca’s said it was considering its options, including bankruptcy, and revealed plans to close some 140 of its approximate 700 stores, with the number subject to change. (As of Dec. 4, 558 stores remain open for business.) And in an SEC filing in June, Francesca's warned that its liquidity has been adversely impacted by negative operating results due to the pandemic and “there is no assurance that we will have sufficient liquidity to continue operations.” 

“Implementing this process allows Francesca’s  to address our lease obligations and seek a new investor that can see Francesca’s  into the future,” said Andrew Clarke, CEO. “The financing provided by Tiger will enable Francesca’s to pursue a sale process that will allow us continue to focus on our omni-channel strategies, optimize our boutique fleet, broaden our customer reach with brand extensions and drive sustainable, profitable growth,” 

FTI Consulting, Inc. and FTI Capital Advisors LLC have been retained as the retailer’s financial advisor and investment banker, subject to approval of the court, to manage the sale and auction process. Bids are expected to be submitted by January 13,  with the sale intended to be concluded by January 20.