Boutique women’s clothing chain Francesca’s Holdings filed for bankruptcy after the coronavirus pandemic accelerated its sales drop.
The Houston-based company sought Chapter 11 protection in US Bankruptcy Court in Delaware with plans to sell the business, according to a statement.
TerraMar Capital or an affiliate has agreed to become the stalking-horse bidder in a bankruptcy auction, and Francesca’s existing lender, Tiger Finance, has committed to provide $25 million of debtor-in-possession financing, the retailer said.
“Implementing this process allows Francesca’s to address our lease obligations and seek a new investor that can see Francesca’s into the future,” chief executive Andrew Clarke said in the statement.
Other potential bidders are studying the company, the chain added, with a target of January 20 for completing a sale.
Francesca’s joined a growing list of clothing retailers seeking to reorganise under court protection amid the pandemic.
The chain temporarily closed all of its stores in March and began reopening them in April, the company said in its first-quarter earnings call. But net sales fell 50 per cent in the first quarter, raising doubt about its ability to survive.
The company recently said in a filing that it plans to shutter about 140 of its 700 stores and added on late Thursday that more closings might be necessary. Some 558 stores remain open, the company said.
The first store opened in Houston in 1999, touting its frequently changing inventory. Its stores in malls and on main streets cater to shoppers, featuring apparel, accessories and gifts.
Francesca’s stock fell as the pandemic struck this year and retailers struggled to stay solvent. Its filing follows bankruptcies this year by merchants including JC Penney and Century 21 Department Stores.