Item 2.01 Completion or Disposition of Assets.
As previously reported, on December 3, 2020, Francesca's Holdings Corporation
(the "Company") and each of its subsidiaries (together with the Company, the
"Debtors") commenced voluntary cases (the "Chapter 11 Cases") for relief under
chapter 11 of title 11 of the United States Code, §§ 101-1532, et seq. (the
"Bankruptcy Code") in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"). The Chapter 11 Cases are being jointly
administered under the caption In re: Francesca's Holdings Corporation, et al.,
Case No. 20-13076 (BLS).
Also as previously reported, on January 19, 2021, the Debtors entered into an
Amended and Restated Asset Purchase Agreement (the "Amended and Restated Asset
Purchase Agreement") with Francesca's Acquisition, LLC, a Delaware limited
liability company ("Francesca's Acquisition"), Tiger Capital Group, LLC, a
Massachusetts limited liability company ("Tiger" and, together with Francesca's
Acquisition, "Buyer"), and TerraMar Capital, LLC, a Delaware limited liability
company, pursuant to which Francesca's Acquisition agreed to (a) purchase, upon
the terms and subject to the conditions set forth in the Amended and Restated
Asset Purchase Agreement, the Acquired Assets (as defined in the Amended and
Restated Asset Purchase Agreement) in exchange for (i) a cash purchase price of
$18,000,000, subject to certain adjustments, (ii) the issuance by Francesca's
Acquisition of a promissory note to the Debtors in the principal amount of
$1,250,000 payable on or prior to December 31, 2021 and (iii) the reimbursement
of certain financing-related fees, and (b) the assumption of certain contracts,
leases and other Assumed Liabilities (as defined in the Amended and
Restated Asset Purchase Agreement). Pursuant to the terms of the Amended and
Restated Asset Purchase Agreement, the Company will be required to change its
name within ten business days following the consummation of the Asset Sale.
On January 30, 2021, the Debtors completed the transactions contemplated by
the Amended and Restated Asset Purchase Agreement (the "Asset Sale"). The Asset
Sale was conducted pursuant to Section 363 of the Bankruptcy Code and was
previously approved by the Bankruptcy Court on January 22, 2021. The Company
anticipates that there will be no proceeds from the Asset Sale available for
distribution to the Company's common stockholders. The Company also entered the
Agency Agreement (as defined below) on January 30, 2021 for the purpose of
conducting boutique closing sales of inventory at certain of the Company's
locations.
In connection with the consummation of the Asset Sale, on February 1, 2021, the
obligations under the Company's Senior Secured Superpriority
Debtor-In-Possession Credit Agreement were repaid in full and such credit
agreement was terminated.
Item 2.05 Costs Associated with Exit or Disposal Activities.
The Company is currently unable in good faith to make a determination of an
estimate or range of estimates required to be disclosed by paragraph (b), (c) or
(d) of Item 2.05 of Form 8-K with respect to the Asset Sale.
In addition, as previously reported, in connection with the closing of the Asset
Sale, on January 30, 2021, the Company (on behalf of itself and the other
Debtors) entered into an Agency Agreement (the "Agency Agreement") with Tiger
and SB360 Capital Partners, LLC (together, the "Agent"), pursuant to which the
Agent will act as the Company's agent for the purpose of conducting boutique
closing sales of inventory at certain of the Company's locations. The locations
subject to the store closing sales will be determined by Buyer subject to the
outcome of negotiations with landlords in the Chapter 11 Cases, among other
factors, and subject to the terms of the Amended and Restated Asset Purchase
Agreement and Agency Agreement, except that, pursuant to the Amended and
Restated Asset Purchase Agreement, Buyer agreed to assume the respective leases
for no fewer than 275 boutiques currently operated by the Debtors, which
assumption could be pursuant to an amended lease. The Company is currently
unable in good faith to make a determination of an estimate or range of
estimates required to be disclosed by paragraph (b), (c) or (d) of Item 2.05 of
Form 8-K with respect to the boutique closing sales pursuant to the Agency
Agreement.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(b) On January 30, 2021, Mr. Andrew Clarke resigned from the Board of Directors
(the "Board") of the Company as a Class II director of the Board and from his
positions as President and Chief Executive Officer of the Company and from all
other positions he holds with the Company and each of its subsidiaries,
effective upon the closing of the Asset Sale. The resignation of Mr. Clarke was
not the result of a disagreement with the Company or on any matter relating to
the Company's operations, policies or practices. Following the closing of the
Asset Sale, Mr. Clarke was appointed as Chief Executive Officer of Francesca's
Acquisition, the purchaser in the Asset Sale, which isan entity unaffiliated
with the Company.
On January 30, 2021, Ms. Cindy Thomassee resigned from her position as Executive
Vice President and Chief Financial Officer of the Company and from all other
positions she holds with the Company and each of its subsidiaries, effective
upon the closing of the Asset Sale. The resignation of Ms. Thomassee was not the
result of a disagreement with the Company or on any matter relating to the
Company's operations, policies or practices. Following the closing of the Asset
Sale, Ms. Thomassee was appointed as Chief Financial Officer of Francesca's
Acquisition, the purchaser in the Asset Sale, which is an entity unaffiliated
with the Company.
On February 1, 2021, Mr. Joseph O'Leary and Ms. Patricia Bender resigned from
their positions as Class I directors of the Board and Ms. Susan McGalla resigned
from her position as a Class II director of the Board, in each case, effective
immediately. The resignation of Mr. O'Leary, Ms. Bender and Ms. McGalla was not
the result of a disagreement with the Company or on any matter relating to the
Company's operations, policies or practices.
(c) On January 30, 2021, the Board approved the appointment Mr. Anthony Saccullo
as the Company's Wind-down Officer, effective on the first business day
following the closing of the Asset Sale (February 1, 2021). Mr. Saccullo, 44, is
the founder and managing member of A.M. Saccullo Legal, LLC, a Delaware-based
law firm rendering services in commercial bankruptcy, corporate and commercial
litigation, and corporation transactions and formation and is also the founding
member of Saccullo Business Consulting, a business consulting firm that offers
non-legal bankruptcy services to companies and commercial bankruptcy estates,
positions he has held since May 2010. Mr. Saccullo has also previously served as
liquidating trustee in the wind numerous other retail cases and Saccullo
Business Consulting has served, and currently serves, in a number of other
retail bankruptcy cases of similar size and complexity to the Chapter 11 Cases.
(e) In connection with the appointment of Mr. Saccullo as Chief Wind-down
Officer, on January 28, 2021, the Company entered into an engagement letter with
Mr. Saccullo effective on the first business day following the closing of the
Asset Sale, to provide for, among other things, a monthly fee of $20,000 and
hourly compensation for certain employees of Saccullo Business Consulting who
assist Mr. Saccullo in providing wind-down services to the Company (the
"Engagement Letter"). The Engagement Letter also provides for customary
indemnification provisions.
The foregoing summary of the Engagement Letter for Mr. Saccullo is qualified in
its entirety by the full text of the Engagement Letter. A copy of the Engagement
Letter is filed as Exhibit 10.1 to this Current Report on Form 8-K and
incorporated by reference herein.
Except as described above, there are no arrangements or understandings between
Mr. Saccullo and any other person pursuant to which Mr. Saccullo was appointed
as Chief Wind-down Officer and there are no transactions between the Company and
Mr. Saccullo that would require disclosure under Item 404(a) of Regulation
S-K. No family relationship exists between Mr. Saccullo and any director or
other executive officer of the Company.
Item 7.01 Regulation FD Disclosure.
On February 1, 2021, the Company issued a press release announcing the closing
of the Asset Sale disclosed under Item 2.01 of this Current Report on
Form 8-K. A copy of the press release is furnished as Exhibit 99.1 to this
report. This information shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, and is not incorporated by
reference into any filing of the Company, whether made before or after the date
hereof, regardless of any general incorporation language in such filing.
Item 8.01 Other Events.
Due to the considerable amount of time and resources that management must devote
to the Chapter 11 Cases and related administrative requirements, the Company
does not have access to sufficient resources to continue filing the periodic
reports required by Sections 13 or 15(d) under the Exchange Act. As a result,
the Company does not intend to file a Quarterly Report on Form 10-Q for the
fiscal quarter ended October 31, 2020 or an Annual Report on Form 10-K for the
fiscal year ended January 30, 2021, including accompanying financial statements
and related notes, or any other reports on Form 10-Q or Form 10-K, for
subsequent periods. Instead, until the Company's common stock is cancelled and
of no further force or effect, the Company intends to file with the SEC Current
Reports on Form 8-K containing (a) disclosure of all material events in the
Chapter 11 Cases and (b) as exhibits, the operating and financial reports that
are filed by the Company with the Bankruptcy Court. The Company believes that
the Current Reports on Form 8-K to be filed by the Company as described above
will provide investors with information about the material events in the Chapter
11 Cases and the assets and liabilities of the Company.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
2.1 Amended and Restated Asset Purchase Agreement, dated January 19,
2021, by and among Francesca's Holdings Corporation, a Delaware
corporation, Francesca's Services Corporation, a Texas corporation,
Francesca's Collections, Inc., a Texas corporation, Francesca's LLC,
a Delaware limited liability company, Francesca's Acquisition, LLC,
a Delaware limited liability company, Tiger Capital Group, LLC, a
Delaware limited liability company, and TerraMar Capital, LLC a
Delaware limited liability company (incorporated by reference to
Exhibit 2.1 of the Current Report on Form 8-K filed by Francesca's
Holdings Corporation on January 21, 2021)
10.1 Engagement Letter, dated January 28, 2021, by and among Mr.
Anthony Saccullo and Francesca's Holdings Corporation, Francesca's
LLC, Francesca's Collections, Inc. and Francesca's Services
Corporation
99.1 Press Release issued by Francesca's Holdings Corporation on
February 1, 2021
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