Francesca’s has received bankruptcy court approval to sell its remaining business to investment firms TerraMar and Tiger Capital Group for $18 million in cash, plus the assumption of approximately $7.75 million in liabilities. The deal is expected to preserve at least 275 of Francesca’s remaining 551 locations.
The retailer’s new owners plan to continue operating its corporate offices and will keep its management team and nearly all employees on board, according to The Wall Street Journal. As of December 2020, Francesca’s had approximately 4,540 employees, including 223 corporate workers.
“This is a frankly very, very welcome result,” said Judge Brendan Shannon during the hearing. “This is an extraordinarily challenging environment and to come up with competing, going concern sales and the opportunity for a robust auction, that would not have been anyone’s likely prediction at the outset of this process.”
The accessories retailer has been experiencing financial difficulty for some time. Francesca’s entered into a $110 million loan credit agreement with Tiger Finance in August 2019 to enable a turnaround without the need for bankruptcy. However, the pandemic weighed heavily on the retailer’s results, leading to a comparable sales drop of 5%for the three months ended Aug. 1, 2020.
Francesca’s ultimately closed 140 stores in November 2020 before closing an additional 97 locations and filing for bankruptcy in December 2020. Many of the affected stores are in malls that have been hit hard by lockdowns and social distancing.