Clothing chain Francesca's files bankruptcy to sell itself
Company says it will tap TerraMar Capital, which invests in midsize businesses, as lead bidder
Clothing and accessories chain Francesca's Holdings Corp. filed for bankruptcy protection to ease a planned sale of assets to an investor as retailers face continued financial pressure during the coronavirus pandemic.
Francesca's sought chapter 11 in the U.S. Bankruptcy Court in Wilmington, Del., on Thursday to run a sales process while tapping TerraMar Capital LLC, which invests in midsize businesses, as the lead bidder. TerraMar's offer will be subject to higher bids and an auction if necessary, and requires court approval to close.
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Francesca's CEO Andrew Clarke said a number of other interested parties are engaged in due diligence.
Francesca's storefront (Google Street View)
"We are confident that we will emerge from this process as a stronger company poised to drive growth by exploring new brand avenues, expanding our e-commerce channels, and providing our customers with the latest fashion options and treasure-hunt experiences they know and love us for, " he said.
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Houston-based Francesca's said in November that it would close roughly 140 of its boutiques--which sell apparel, jewelry, accessories and gifts--by the end of January, leaving about 560 in operation. The company said Thursday it planned to renegotiate a number of leases during the bankruptcy process, which "may include closing additional boutiques."
Francesca's lender Tiger Finance LLC is supplying a $25 million financing package to carry the company through chapter 11 and cover employee wages and benefits and the provision of customer orders. The company's planned sales process would conclude by Jan 20.
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The coronavirus has been devastating for many retailers as government mandates and shoppers' fear of contagion have reduced foot traffic at bricks-and-mortar locations. The pandemic exacerbated the challenges retailers already faced from changing consumer habits and the growing popularity of online shopping.
Retailers shut down stores for good at a record pace in the first half of 2020, while big companies like J.C. Penney Co., Neiman Marcus Group Inc. and Brooks Brothers Inc. filed for chapter 11.