Francesca's: Second Bankruptcy Ends in Full Liquidation

Francesca's Acquisition, LLC, the Houston-based specialty retailer of women's apparel and accessories, filed chapter 11 on February 5, 2026, in the U.S. Bankruptcy Court for the District of New Jersey. The filing marks the second bankruptcy for the Francesca's brand, which previously restructured through chapter 11 in December 2020. Unlike the earlier case — which resulted in a going-concern sale and continued store operations — the 2026 filing is a full liquidation, with going-out-of-business sales under way at all remaining locations.

Court filings attributed the collapse to a cascading sequence of events in late 2025 and early 2026: a potential investor withdrew funding on or about December 30, 2025; two major suppliers then lost their own lender financing, cutting off product delivery; and the company's prepetition lenders issued a notice of default. The company, which once operated nearly 700 boutiques across 45 states, had approximately 400 stores and 3,000 employees at the time of filing.

Debtor(s)	Francesca's Acquisition, LLC (4 jointly administered entities)
Court	U.S. Bankruptcy Court, District of New Jersey
Case Number	26-11312
Petition Date	February 5, 2026
Judge	Hon. Mark Edward Hall

Store Closing and Liquidation Process

The debtors commenced going-out-of-business sales prepetition, starting January 16, 2026, under a consulting agreement with Tiger Capital Group, SB360 Capital Partners, and GA Retail Solutions. The three firms supervise advertising, discounting, staffing, and loss prevention across all approximately 400 remaining locations. Initial discounts ranged from 25% to 40% off across all product categories. The base consulting fee is 2.0% of gross proceeds, with an additional 0.50% incentive fee if recovery exceeds 45% of retail value. The court authorized the debtors to assume the prepetition consulting agreement at the first-day hearing on February 6, 2026.

Cash collateral. The debtors are operating on cash collateral — there is no debtor-in-possession financing. The prepetition secured lenders (Tiger Finance, LLC as administrative agent; Second Avenue Capital Partners LLC as funding agent) consented to cash collateral use subject to adequate protection, including replacement liens on postpetition collateral, a superpriority claim, weekly cash management fees of $12,500, default interest on prepetition obligations, and a $250,000 lender indemnity reserve. The five-week budget covers approximately $3 million in disbursements. The court granted the cash collateral motion on an interim basis, entering an interim order on February 8, 2026, with a final hearing scheduled within 30 days.

Intellectual property disposition. The debtors retained Hilco IP Services (d/b/a Hilco Streambank) to market and sell IP assets including trademarks, domain names, customer data, social media properties, and copyrights, as described in the retention application. Hilco's commission is tiered: 10% of gross proceeds up to $3 million, 12.5% from $3 million to $5 million, and 15% above $5 million.

Key professionals. The debtors proposed Mandelbaum Barrett PC (Vincent J. Roldan, Katie F. Warren) as bankruptcy counsel. SierraConstellation Partners provides CFO services through Curt Kroll, who also signed the First Day Declaration. Greenberg Traurig, LLP represents the prepetition secured lenders.

From Houston Boutique to National Chain

Francesca's was founded in Houston in 1999 and grew into a national specialty retailer targeting Gen Z and multigenerational customers with apparel, jewelry, and accessories at accessible price points. The company operated through a boutique-format model with small-footprint stores in malls and shopping centers. By 2011, the company had expanded to 268 locations across 38 states and listed on the Nasdaq Global Select Market under the ticker FRAN. The store count peaked at approximately 700 boutiques around 2016–2017.

First bankruptcy (2020). The COVID-19 pandemic and pre-existing financial pressures led Francesca's Holdings Corporation to file chapter 11 in the District of Delaware on December 3, 2020. At that time, the company operated approximately 558 boutiques, with 140 already slated for closure. Tiger Finance provided a $25 million DIP financing facility, and TerraMar Capital served as the stalking horse bidder. O'Melveny & Myers and Richards Layton & Finger served as legal advisors; FTI Consulting served as financial advisor.

363 sale and post-emergence. The Section 363 asset sale closed on February 1, 2021. The buyers — Francesca's Acquisition LLC (a TerraMar Capital affiliate), Tiger Capital Group, and SB360 Capital Group — acquired the business for approximately $18 million. At least 275 boutiques continued operating post-sale, with a $25 million asset-based revolving credit facility from Tiger Finance and Second Avenue Capital Partners. CEO Andrew Clarke continued leading the restructured business.

Post-acquisition growth attempts. The new ownership pursued brand expansion. In 2022, Francesca's launched Franki, a tween clothing brand, opening nine stand-alone stores in A malls. In May 2023, the company acquired Richer Poorer, a California-based lifestyle brand, with Bank of America providing financing. Both brands ultimately lost EBITDA or failed to build sufficient traction and are now dormant. In September 2024, MAS Acquisition, LLC acquired the debtors. MAS Acquisition is a non-debtor holding company that is the 100% parent of Francesca's Acquisition, LLC.

Path to the Second Filing

January 2023 data breach. On or around January 31, 2023, an unauthorized third party accessed Francesca's network systems, compromising personal data including Social Security numbers, driver's license numbers, and financial account details for approximately 58,000 individuals. The breach shut down the company's systems and disrupted operations, impacting sales and EBITDA due to paralysis of inventory and pricing systems. A class action (Doherty et al. v. Francesca's Acquisition, LLC, Case No. 4:23-cv-03881) was settled in 2025, with class members eligible for reimbursement of up to $5,000 in losses.

Operational headwinds (2023–2024). In addition to the data breach aftermath, the company undertook an e-commerce platform migration in 2023 and 2024 that created operational challenges. Marketing and promotion spending increased between 2022 and 2024 to drive sales.

Post-acquisition turnaround efforts. After MAS Acquisition's September 2024 purchase, the company reviewed inventory, refocused on the target customer, and improved merchandising. Cost reductions in freight, logistics, and labor were implemented. The company reported positive same-store sales in 2025 with improved margins over 2024. SierraConstellation Partners was engaged to assess the financial situation, and retail executive Bridgit Lombard was brought on as Executive Chair to lead the turnaround.

Terminal events (December 2025 – January 2026). The turnaround required additional capital. The company held discussions with at least six investors, and one pledged funds sufficient to maintain operations through January 2026. That investor withdrew on or about December 30, 2025. Less than a week later, two major suppliers had their funding terminated by their own lenders, making product delivery impossible. In January 2026, the company received a notice of default from its prepetition lenders. On January 14, 2026, the company announced the closing of substantially all retail stores and commenced going-out-of-business sales. On February 4, 2026, the debtors entered into a Fifth Forbearance Agreement and Seventh Amendment to the Credit Agreement. The chapter 11 petition was filed the next day.

Capital Structure

Total prepetition secured debt was approximately ~$30.1 million as of the petition date, consisting of a revolving credit facility (~$26.1 million outstanding against a $40 million commitment) and a term loan (~$4 million outstanding against a $4.5 million commitment). Tiger Finance, LLC serves as administrative and collateral agent; Second Avenue Capital Partners LLC as funding agent.

Facility	Outstanding	Commitment
Revolving Credit Facility	~$26.1 million	$40 million
Term Loan	~$4 million	$4.5 million

The revolving loans carried Adjusted Term SOFR + 6.25%, currently accruing at the default rate (applicable rate + 5.00% penalty). The term loan carried Base Rate + 5.00%, also at the default rate following the event of default. The original revolving credit agreement was dated February 21, 2024, and was amended multiple times, culminating in the Fifth Forbearance Agreement and Seventh Amendment on February 4, 2026 — one day before the petition.

After the 2021 acquisition, Tiger Finance, SB360, and Second Avenue Capital Partners had provided a $25 million asset-based revolving credit facility. Tiger Finance also entered a $10 million term loan agreement. The February 2024 credit agreement appears to have replaced or restructured these earlier facilities.

Top unsecured creditors. The voluntary petition lists the largest unsecured creditors, all apparel suppliers:

Creditor	Claim Amount
Trixxi Clothing Company	$9,448,575
Arc Textiles Inc	$5,001,841
Star Style Apparel LLC	$2,559,486
K & K Clothing LLC	$2,542,421
Winning Intl Trading Dev Ltd	$2,452,365

One vendor reportedly claimed approximately $250 million in unpaid invoices. This figure has not been verified in court filings and exceeds the amounts shown on the petition's creditor schedules, where the top five unsecured claims total approximately $22 million.

Workforce and Customer Impact

Francesca's employed approximately 3,000 workers (approximately 2,650 hourly and 425 salaried), the majority in retail store sales and supervisory positions. Historical average biweekly gross payroll was approximately $2.4 million. As of the petition date, approximately $2.16 million in wages and $60,000 in bonuses earned in January 2026 remained unpaid, as detailed in the wages motion. The company's 401(k) plan was terminated as of January 31, 2026.

WARN Act concerns. A WARN notice dated January 14, 2026, was filed with the Texas Workforce Commission, disclosing the impact on over 200 employees at the Houston headquarters. The notice cited "sudden and unexpected circumstances." Chief Stores and Culture Officer Christine Kaighn signed the WARN letter. At least one law firm has opened an investigation into whether the company provided the WARN Act's required 60-day notice. Employees at retail locations were reportedly let go with no advance notice.

Customer programs. Approximately $3.5 million in outstanding gift cards and approximately $277,000 in potentially redeemable Fran Club rewards (approximately 2.8 million accrued points) were outstanding at the petition date. Total prepetition customer program obligations were approximately $3.8 million, though the majority do not require cash expenditure. The debtors' customer programs motion sought authority to continue honoring these programs.

Frequently Asked Questions

Why is Francesca's closing all its stores?

Court filings identify a cascade of events: a potential investor withdrew funding on or about December 30, 2025; two major suppliers lost their own lender financing, cutting off product delivery; and the company's prepetition lenders issued a notice of default in January 2026. The company determined that liquidation was the only viable path.

Is this Francesca's first bankruptcy?

No. Francesca's previously filed chapter 11 in December 2020 under the name FHC Holdings Corporation in the District of Delaware. That restructuring resulted in a going-concern sale to a TerraMar Capital and Tiger Capital affiliate in February 2021, with approximately 275 stores continuing operations.

How many stores are closing?

All remaining locations. Court filings describe approximately 400 boutiques across 45 states designated as closing stores. Pre-filing news reports cited over 450 locations, which may reflect the pre-closure count before some stores shut between January 14 and February 5.

What happened to employees?

Francesca's employed approximately 3,000 workers at the time of filing. A WARN notice was filed with the Texas Workforce Commission on January 14, 2026, disclosing the impact on over 200 Houston headquarters employees. Retail store employees were reportedly terminated without advance notice. The debtors sought court authority to pay approximately $2.16 million in accrued prepetition wages.

Are Francesca's gift cards still valid?

The debtors sought court authority to continue honoring approximately $3.5 million in outstanding gift cards and the Fran Club rewards program. Customers holding gift cards should monitor the case docket for updates on the status of these obligations.

What caused Francesca's financial problems?

Court filings point to multiple factors: a January 2023 data breach that shut down company systems and disrupted operations; a difficult e-commerce platform migration; losses on non-core brands Franki and Richer Poorer; increased marketing spend; and ultimately the loss of a committed investor and critical suppliers in late 2025 and early 2026.

Who owns Francesca's now?

Francesca's Acquisition, LLC is wholly owned by MAS Acquisition, LLC, which acquired the debtors in September 2024. MAS Acquisition is a non-debtor holding company. Prior to that, the business was owned by a TerraMar Capital affiliate following the 2021 asset sale.

Is there a DIP loan?

No. The debtors are operating on cash collateral — authorization to use the prepetition secured lenders' collateral. The cash collateral budget covers approximately $3 million in disbursements over five weeks, with adequate protection including replacement liens, a superpriority claim, and a $250,000 lender indemnity reserve.

What is happening with the Francesca's brand and intellectual property?

Hilco IP Services (Hilco Streambank) has been retained to market and sell the debtors' IP assets, including trademarks, domain names, customer data, social media properties, and copyrights.

Who is the claims agent for Francesca's?

Stretto, Inc. serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

For more bankruptcy case analyses and restructuring insights, visit ElevenFlo's bankruptcy blog.