• Retail boutique chain Francesca's has filed for Chapter 11 bankruptcy
  • It already has a buyer lined up and has received $25 million from its current lender to maintain operations through early 2021
  • A planned closure of 140 locations will occur and possibly expand as Francesca's renegotiates leases

Retail boutique chain Francesca’s (FRAN) has filed for bankruptcy and plans on selling its business to a new firm, maintaining much of its day-to-day operations but following through on previous plans to close at least 140 stores.

Francesca’s already has a buyer lined up, using a $25 million debtor-in-possession loan from its existing lender, Tiger Finance LLC, to navigate the bankruptcy process, Francesca’s Thursday announcement states. 

That eventual firm is TerraMar Capital LLC, who’s submitted a letter of intent to become the stalking horse bidder in Francesca's auction. Francesca’s letter characterizes TerraMar Capital as an “investment firm that provides debt and equity capital to middle-market businesses.” TerraMar apparently has some competition for the role, but no specific entities were named in the release.

The entire process is expected to wrap up by Jan. 20, 2021, with bids submitted by Jan. 13 and the auction itself commencing no later than Jan. 15. 

Francesca’s plans to limit the disruption of its normal operations as much as possible. Tiger Finance’s $25 million will go a long way toward that, funding not only daily functions but planned expansions and new products even as the company goes through Chapter 11.

“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,” said Andrew Clarke, Francesca's CEO.

That said, a planned cull of 140 physical locations is still set to go through. Those closures may also expand as Francesca's plans to renegotiate an unnamed number of leases with its middle managers.

As of 2:27 p.m. Friday, shares of Francesca’s stock were down 4.15%. 

Francesca’s is far from the only apparel store struggling during the COVID-19 pandemic. J.C. Penny, Neiman Marcus, and Brooks Brothers have all filed for bankruptcy since the start of the pandemic, their physical locations weighing them down as they compete with online retailers.

bankruptcy Pictured: A sign in the window of a home decor store in San Francisco announces the store's going out of business sale. Photo: Robert Alexander/Getty Images