Francesca's Acquisition - Chapter 11 Plan Terms

Plan Terms

Overview

• The court confirmed the second amended combined disclosure statement and joint Chapter 11 plan of liquidation of Francesca's Acquisition, LLC and three affiliated debtors on Sept. 10, 2026, following a Sept. 8 confirmation hearing; the plan is co-proposed by the debtors and the official committee of unsecured creditors, whose seven members all hold general unsecured claims.
• The plan winds the estates down after two already-completed value events: the section 363 sale of the debtors' intellectual property to Stand Out for Good, Inc. for $7 million, approved March 12, 2026, and the chain-wide going-out-of-business store closing sales that liquidated inventory. A liquidating trust run by Tracy L. Klestadt, Esq., holds the remaining assets and makes distributions.
• Allowed administrative and priority claims are paid in full; general unsecured creditors share pro rata in the balance of the liquidating trust proceeds.
• The specialty women's apparel and accessories retailer, founded in Houston in 1999 and focused on a Gen Z and multigenerational customer, operated roughly 400 boutiques across 45 states plus francescas.com at the time of filing, down from a 2016-2017 peak of roughly 700 stores and over $500 million in sales. Apparel and jewelry made up 66% of 2025 product mix and e-commerce roughly 13% of 2025 sales.
• The debtors filed in the District of New Jersey (Newark) on Feb. 5, 2026. The U.S. Trustee appointed the creditors' committee on Feb. 23, 2026; it retained Fox Rothschild LLP as counsel and Emerald Capital Advisors as financial advisor.

Path Into Chapter 11

• This is the debtors' second Chapter 11. A combination of operational challenges and the COVID-19 shutdown drove a 2020 filing in Delaware, in which roughly 200 unprofitable stores closed and go-forward leases were restructured; the debtors emerged in July 2021, returned to profitability later that year, recovered 2016 revenue levels by 2022, and expanded average store sales by 27% or more from 2019 to 2022.
• A Jan. 31, 2023, data breach shut down the debtors' systems and paralyzed inventory and pricing systems, hitting sales and EBITDA; a disruptive e-commerce upgrade compounded the damage in 2023 and 2024, the debtors spent more on marketing and promotion to drive sales between 2022 and 2024, and the non-core Franki and Richer Poorer brands either lost significant EBITDA or never gained traction and are now dormant.
• MAS Acquisition, LLC, a non-debtor holding company with no operations, acquired the debtors in September 2024 and is the 100% owner of Francesca's Acquisition, which in turn owns each other debtor. Post-acquisition cost reductions in freight, logistics and labor produced positive same-store sales and margin expansion from 2024 to 2025, but supply chain and merchandise-access problems persisted.
• An anticipated capital infusion in January 2026 did not materialize, and by January 2026 two major suppliers had ceased operations, causing a cascading decline in the business.

Prepetition Capital Structure

• Total secured debt at the petition date was approximately $30.1 million, held by lenders that support the cases and the store closing sale process.
  • Revolver: approximately $26.1 million outstanding, split between Committed Revolving A Loans and Committed Revolving B Loans, under a $40 million asset-based commitment.
  • Term loan: approximately $4 million outstanding on a $4.5 million facility.
  • Security: first priority lien on substantially all assets, including accounts, goods, equipment, inventory, fixtures and intangibles including intellectual property.
• The facilities arise under a February 2024 revolving credit agreement, twice amended in 2024, with Tiger Finance, LLC as administrative and collateral agent and Second Avenue Capital Partners LLC as funding agent (together, the prepetition agents).
• The debtors were in default at the petition date; the parties had entered a series of forbearance agreements, most recently a fifth forbearance agreement and a seventh credit agreement amendment on Feb. 4, 2026, one day before filing.
• The schedules filed March 9, 2026, list approximately $43.5 million in assets, including $3.19 million in cash, $2.1 million in deposits and prepayments, $2.4 million in receivables, $25 million in inventory and finished goods, $9.7 million in office fixtures and equipment and $1.1 million in a federal net operating loss, against $28.1 million in secured debt, no priority unsecured claims and $62 million in general unsecured claims excluding intercompany payables. The scheduled asset total excludes a $1.09 billion intercompany receivable owing from Francesca's Operations, Inc. to Francesca's Administrative Management, Inc.
• The scheduled secured debt of $28.1 million sits below the $30.1 million of total secured debt the plan states as of the same petition date.

Global Settlement

• The centerpiece of the plan is a global settlement among the debtors, the prepetition secured lenders and the committee, approved by a Rule 9019 settlement order entered July 29, 2026, and memorialized alongside the final cash collateral order entered July 30, 2026. It follows a May 13, 2026, mediation before Judge Vincent F. Papalia that did not itself produce a resolution.
• Settlement payment: the prepetition secured lenders pay $3 million to the estates, being cash collateral proceeds previously applied to the term loan claims ($2.3 million) and the Tranche B claims ($700,000). In exchange they receive releases.
• Carve-out funding: the lenders fully fund the Carve-Out and Carve-Out reserves in the amount of $1,015,000, consisting of:
  • $715,000 for accrued and unpaid professional and claims agent fees per the budget attached to the final cash collateral order;
  • accrued and unpaid clerk and U.S. Trustee fees the debtors estimate at no more than $125,000, plus Chapter 7 trustee fees of $50,000, which on the effective date are instead paid to the liquidating trust; and
  • $125,000 for the post-carve-out reserve.
• 503(b)(9) claims: the lenders fund these from cash collateral on hand in an amount the debtors estimate at no more than $200,000.
• Stub rent: the lenders funded a $2,832,751.51 cash reserve from cash collateral that has been fully distributed to landlords on account of all stub rent claims.
• Retained claims: the estates keep all claims and causes of action, including avoidance actions; UCC Article 9 commercial tort claims; claims against present and former officers, directors, shareholders, members, managers, employees, affiliates and insiders, including for breach of fiduciary duty or aiding and abetting, and under any D&O or fiduciary policies including for bad faith; the non-exclusive right to seek a section 505 tax determination; tax refunds including tariff refunds; and the debtors' interests in the Discover Financial Services merchant class action and the Google LLC advertising antitrust litigation.
• Shared Recoveries waterfall: proceeds of the tax refunds and the two litigation interests are split between the lenders, on account of the remaining prepetition loan balance, and the estates:
  • first $500,000 of net proceeds to the prepetition secured lenders;
  • next $500,000 to the estates; and
  • 50/50 thereafter.
• Any settlement, sale or resolution of the Shared Recoveries requires approval from each of the estates, the committee and the lenders, to be considered in good faith and resolved within a commercially reasonable time not to exceed five business days.
• If the plan is not confirmed and the cases are dismissed or converted to Chapter 7, the plan's other settlements are void and the projected recoveries unavailable, but the global settlement and settlement order remain valid, binding and enforceable.

Cash Collateral and Stub Rent

• The debtors obtained interim cash collateral relief on Feb. 8, 2026, to fund the wind-down, but final relief became inextricably tied to the store closing sales and stub rent. Landlords and the committee objected because store closing sale proceeds were used in part to pay down the prepetition secured lenders while many landlords continued honoring leases without payment so the sales could continue and the cases could be financed; those constituencies filed omnibus objections covering cash collateral, stub rent and final store closing sale relief throughout early March 2026.
• At a March 12, 2026, status hearing the debtors, objecting landlords and the committee reached broad terms on all three issues. The court entered a stub rent stipulation on March 18, 2026, establishing a $2,832,751.51 reserve carved out of the cash collateral budget, with the prepetition agents agreeing that reserve amounts would not pay down the prepetition secured loans and the parties to agree on timing and distribution mechanics by the time final cash collateral relief was entered. In exchange, the objecting landlords consented to entry of the final store closing sale order.
• The final cash collateral hearing was adjourned several times, most recently to April 16, 2026, to let negotiations proceed off a budget proposed after the store closing sales concluded; the final order ultimately entered July 30, 2026.

Store Closing Sales

• The debtors moved on the petition date to continue the chain-wide going-out-of-business sales that had begun prepetition under a consulting agreement among Tiger Finance, SB360 Capital Partners, LLC and GA Retail Solutions, LLC, obtaining interim relief Feb. 11, 2026, and final relief March 26, 2026, 49 days after filing, after several weeks of negotiation with landlords, the committee and government entities.
• The final order resolved each constituency's objection: signage requirements, preservation of shopping center operating requirements and a dispute resolution process for landlord compliance issues; periodic reporting, post-sale reconciliations and a committee objection mechanism for the consulting fees; and a procedure for government entities to raise advertising, consumer protection, public safety and tax compliance issues without interrupting the sales. Landlord concerns about administrative insolvency were addressed through the stub rent stipulation.
• March 29, 2026, was the last day of business at the stores, and all stores were closed by March 31, 2026.

IP Sale

• Purchase price: $7 million, paid by Stand Out for Good, Inc., the stalking horse bidder, under an intellectual property asset purchase agreement approved by the IP sale order entered March 12, 2026.
• Assets sold: all trademarks, copyrights and domain names, social media accounts, brand and product design collateral, toll-free telephone numbers, customer data and goodwill. The court found notice and consideration sufficient, the negotiations arm's-length and procedurally fair and the sale conducted in good faith, and deemed the sale free and clear of liens, claims and encumbrances.
• Process: the bid procedures order entered Feb. 12, 2026, one week after the petition date, set a March 5 bid deadline, a March 9 auction date and a March 12 sale hearing, with sale objections due March 6. Hilco IP Services LLC marketed the intellectual property prepetition alongside a going-concern process, reaching over 48,000 contacts; 28 parties accessed the data room. No qualified bid other than the stalking horse's emerged, the auction was cancelled, and the debtors filed a successful bidder notice March 10, 2026.
• No going-concern bidder emerged, so no leases or non-IP contracts were assumed.

Plan Funding

• The plan is funded by the sale proceeds, proceeds from liquidating remaining assets including accounts receivable, and the $3 million settlement payment, under the final cash collateral order and the settlement order. The liquidating trustee distributes liquidating trust proceeds to holders of allowed claims after reserving for disputed claims.
• The professional fee reserve is funded by the debtors and held by the liquidating trustee in an amount equal to estimated professional fee claims.

Treatment of Claims and Interests

• Unclassified administrative expense claims are paid by the liquidating trustee in cash from liquidating trust proceeds as incurred in the ordinary course of the liquidation or as allowed, as soon as practicable after the later of the effective date or entry of a final order allowing the claim, or on other agreed terms. The debtors estimate unpaid administrative expense claims of $200,000, excluding professional fees but including section 503(b)(9) claims. Administrative claims that arose after the May 28, 2026, bar date, other than professional fee claims and governmental claims under section 503(b)(1)(B), (C) or (D), must be filed with the claims agent and served on the liquidating trustee within 30 days after the effective date or be forever barred; absent an objection by the claims objection deadline, an administrative expense claim is deemed allowed in the amount requested.
• Priority tax claims receive cash equal to the allowed amount from liquidating trust proceeds under section 1129(a)(9)(C), or other agreed treatment. The claims register reflects $1.2 million in priority tax claims, which the debtors have not yet evaluated and expect to be subject to objection and reduction.
• Class 1, prepetition agent claims (impaired, entitled to vote): holders receive distributions from estate assets and are treated in accordance with the final cash collateral order, the settlement order and the global settlement; nothing bars the prepetition agents and Class 1 holders from pursuing recovery on their claims from non-estate assets.
• Class 2, other secured claims (unimpaired, deemed to accept): each holder receives its collateral, the net proceeds of any sale or other disposition of the assets on which it has a lien, or less favorable treatment agreed in writing with the liquidating trustee. Any resulting deficiency claim is treated as a Class 4 general unsecured claim.
• Class 3, priority non-tax claims (unimpaired, deemed to accept): each holder receives cash equal to the allowed amount under section 1129(a)(9)(B) or other treatment agreed in writing with the debtors or liquidating trustee.
• Class 4, general unsecured claims (impaired, entitled to vote, voted to accept): each holder receives its pro rata share of the remaining liquidating trust proceeds after senior claims are satisfied in full, the share computed as the holder's then-unsatisfied allowed Class 4 claim over the aggregate unsatisfied amount of remaining allowed Class 4 claims.
• Class 5, intercompany claims (impaired, deemed to reject under section 1126(g)): no recovery, as a consequence of the deemed substantive consolidation for voting and distribution purposes.
• Class 6, interests (impaired, deemed to reject under section 1126(g)): cancelled, with no property retained or received.
• In no event may the aggregate value received or retained on an allowed claim exceed 100% of that claim, absent contrary provision in the plan, confirmation order, another court order or applicable bankruptcy law.
• The general bar date was April 28, 2026; the administrative expense claims bar date was May 28, 2026, at 5:00 p.m. ET; and the governmental bar date was Aug. 20, 2026. The claims register plus scheduled claims reflects about $228 million in general unsecured claims and about $3 million in filed priority claims, which the debtors have not yet reconciled against their books and records and believe largely supersede the scheduled amounts.
• The $228 million general unsecured figure carries the same footnote excluding the $1.09 billion intercompany receivable and runs well above the $62 million in general unsecured claims the debtors scheduled; the roughly $3 million in filed priority claims and the $1.2 million in priority tax claims on the register likewise stand against no scheduled priority unsecured claims.

Voting

• The court approved solicitation and voting procedures on Aug. 4, 2026. Only Class 1 and Class 4 were solicited; Class 2 and Class 3 are unimpaired and presumed to accept, and Classes 5 and 6 receive nothing and are deemed to reject.
• Class 4 voted to accept, determined without counting any insider acceptance, satisfying section 1129(a)(10). Acceptance required a majority in number and at least two-thirds in dollar amount of claims voting in each impaired class.
• The plan is confirmed over the deemed rejection by Classes 5 and 6 under section 1129(b); no class junior to those classes receives or retains property. The confirmation objection deadline was Sept. 1, 2026, at 4:00 p.m. Eastern prevailing time.
• All unresolved objections, statements, joinders, comments and reservations of rights in opposition to the plan were denied and overruled with prejudice on the merits; withdrawn objections are deemed withdrawn with prejudice, and on-the-record resolutions of objections are incorporated into the confirmation order.

Liquidating Trust

• Trustee: Tracy L. Klestadt, Esq., chosen by the committee and appointed under the confirmation order, serving without bond and compensated per the liquidating trust agreement, which the court approved substantially in the form filed with the plan supplement.
• On the effective date all liquidating trust assets, including the estates' assets and all causes of action, vest in the trust free and clear of liens, claims, interests, charges, contractually imposed restrictions and other encumbrances. The trust's purposes are investigating, prosecuting or settling causes of action and litigation claims, liquidating the trust assets and making distributions.
• The trustee is the estates' exclusive representative under section 1123 and holds the powers of a trustee under sections 704 and 1106 and Bankruptcy Rule 2004, including Rule 2004 investigatory power that continues until the trust dissolves, plus control over and the right to waive the debtors' attorney-client, work-product and accountant-client privileges relating to the assets. The transfer of assets to the trust does not waive any privilege of the debtors or the committee.
• Settlement thresholds: the trustee may bring, settle, release or compromise causes of action, avoidance actions and litigation claims, and compromise claims against the estates, without court approval, but any compromise where the amount in controversy or the proposed allowed claim amount exceeds $250,000 requires oversight committee approval; if the oversight committee declines, the trustee may seek court approval over its objection.
• Payment for the trustee and its professionals comes from liquidating trust proceeds and any additional post-confirmation estate recoveries.
• Liability and indemnity: no liability for acts or omissions other than willful misconduct, gross negligence or fraud as determined by final order, with indemnification from the estates on the same carve-out.
• Succession: the oversight committee designates a successor if the trustee dies, is terminated or resigns; if it cannot, the court may appoint a successor from any candidate proposed by a party in interest.

Oversight Committee

• Composition: no more than seven members, drawn from holders of allowed Class 4 claims willing to serve, selected by the creditors' committee or the liquidating trustee as the case may be; the members listed in the liquidating trust agreement are approved by the confirmation order. Actions are taken by majority vote.
• The trustee must consult with and inform the oversight committee on any material action to be taken or not taken.
• Members serve without compensation apart from reimbursement of reasonable, actual costs and expenses, payable by the trustee on proper documentation without court approval. Where the oversight committee declines a proposed settlement and the trustee seeks court approval anyway, the oversight committee may retain counsel to prosecute its objection, with reasonable costs paid by the trustee on the same footing as the trustee's own professionals.
• Members are not liable for acts done or omitted in good faith and in the exercise of business judgment, and in no event absent gross negligence or willful misconduct, with indemnification from the estates excluding willful misconduct, gross negligence and fraud. The oversight committee may seek an accounting from the trust.

Deemed Substantive Consolidation

• The court approved deemed substantive consolidation of the estates for the limited purposes of voting, confirmation and distributions, finding the plan proponents met their evidentiary burden; the plan itself served as the motion.
• On the effective date all assets and liabilities are treated as a single pool for distribution purposes; intercompany guarantees are deemed one obligation and eliminated; claims filed against more than one debtor are deemed single claims against one consolidated debtor; and joint or several liability is deemed one obligation. The plan's own section 2.18 frames the same mechanics with claims deemed filed against Francesca's Acquisition specifically. Claims based on guarantees of collection, payment or performance by one debtor of another's obligations are released.
• Limits: consolidation does not affect a secured creditor's rights in its collateral and does not prejudice the litigation claims, which survive as if no consolidation had occurred, subject to the Article 6 releases. If the court authorizes consolidation of fewer than all estates, the plan is treated as a separate plan for each unconsolidated debtor and no re-solicitation is required.
• The debtors' stated rationale is the interrelated, centrally managed enterprise and that Class 4 general unsecured claims are the only class affected, one of whose recovery sources is litigation claim proceeds that cannot practicably be allocated debtor by debtor.

Releases

• The released parties are the independent directors and officers Curt Kroll and Drew Baird; the creditors' committee, its professionals and its members in that capacity only; the debtors' court-approved professionals; and the parties released under the global settlement, which releases the prepetition secured lenders and, subject to the insurance carve-back below, TerraMar Capital, LLC, its affiliates and principals.
• The debtors, their estates, successors and assigns, including the liquidating trustee, release the released parties from all claims and causes of action, known or unknown, arising from the debtors, their operations, the Chapter 11 cases, securities transactions in the debtors, the subject matter of any claim or interest treated in the plan, business or contractual arrangements with a released party, enforcement of rights and remedies against the debtors, in- and out-of-court restructuring efforts, avoidance actions and the plan itself, in each case for anything occurring on or prior to the effective date.
• Carve-outs from both the releases and the exculpation, identically worded in the global settlement and the plan: Simon Barlava, Morris Barlava, Andrew Clarke, Bridgit Lombard, Christine Kaighn, Victoria Taylor, MAS Acquisition, LLC and any other current or former director, officer, manager, member, employee, affiliate or insider of the debtors, other than TerraMar Capital, LLC, its affiliates and principals, which are released except as to claims or causes of action against TerraMar and its representatives covered by D&O liability insurance, with any recoveries limited to the policies and exclusive of deductibles and defense costs.
• Holders of claims are not otherwise barred or enjoined from pursuing recovery against non-debtors.
• Collateral release: unless a secured or purportedly secured claimant receives its collateral back under the plan, it must turn over and release the property and execute the documents the debtors require, with title reverting to the debtors free and clear. No distribution is made to such a holder until it delivers the release, and a holder that fails to deliver within 60 days of demand is deemed to have no further claim and takes no distribution; a disputed claim holder need not deliver until its claim is allowed or disallowed.

Exculpation

• The exculpated parties are the independent directors and officers solely as to post-petition conduct; the creditors' committee, its retained professionals and its members solely in that capacity; the debtors' court-approved retained professionals in that capacity; and the debtors and their estates.
• Scope covers acts and omissions in connection with the Chapter 11 cases, the formulation, negotiation and implementation of the plan, solicitation, pursuit of confirmation, confirmation, consummation and plan administration, with carve-outs for criminal acts, fraud, gross negligence, willful misconduct and breach of fiduciary duty as determined by final order of a court of competent jurisdiction, and with reasonable reliance on counsel preserved.
• Exculpation does not reach acts or omissions before the petition date or after the effective date.

Injunction, Gatekeeper and No Discharge

• Existing section 105 and 362 injunctions and stays remain in force through the effective date. Thereafter, all entities holding claims or equity interests are permanently enjoined from commencing or continuing any action or proceeding; enforcing, attaching, collecting or recovering on any judgment, award, decree or order; creating, perfecting or enforcing any encumbrance; asserting any setoff, counterclaim, exculpation or subrogation right against the debtors, the estates, the creditors' committee, the liquidating trustee, released parties or the oversight committee and its members; and commencing or continuing any action inconsistent with the plan, while preserving rights exercised consistently with the plan, confirmation order and liquidating trust agreement.
• Claim holders are separately enjoined from any judicial or administrative proceeding against the debtors, the estates, the committee, the trustee or the oversight committee intended or having the effect of interfering with consummation and implementation of the plan and the transfers, payments and distributions under it.
• Gatekeeper: before commencing, continuing, amending, pursuing, joining or supporting any cause of action against the debtors, the liquidating trust, an exculpated party or a released party, a party must first obtain a bankruptcy court determination, after notice and hearing, that the cause of action is not a released claim, and then specific authorization to bring it. The bankruptcy court has sole and exclusive jurisdiction over the release determination and, where legally permissible, over the underlying cause of action; nothing in the provision restricts an insurer from administering, handling, defending, settling or paying claims under the insurance policies.
• No discharge: under section 1141(d)(3), the confirmation order discharges no debts or claims against the debtors.

Preserved Causes of Action

• All causes of action of the debtors and their estates are transferred to, retained and preserved for enforcement by the liquidating trust and trustee, including causes of action under sections 502, 510, 522(f), 522(h), 542 through 545, 547 through 551 and 553; UCC Article 9 prepetition commercial tort claims; and claims against present and former officers, directors, shareholders, members, managers, employees, affiliates and insiders, including breach of fiduciary duty and aiding and abetting claims and claims under D&O or fiduciary policies (the litigation claims).
• No party may rely on the absence of a specific reference in the plan as an indication the trust will not pursue a claim; the deadline to assert or commence any preserved claim, including any challenge to the validity, extent, priority or perfection of asserted liens or security interests, is governed by sections 108 and 546 and otherwise applicable law.
• The debtors have not completed their prepetition transaction investigation; the trustee will continue it after the effective date. The statements of financial affairs reflect approximately $30.8 million in payments by Francesca's Administrative Management, Inc. and $98.8 million by Francesca's Operations, Inc. in the 90 days before the petition date, any of which the trustee may seek to avoid.

Texas Taxing Authorities

• Various Texas ad valorem taxing jurisdictions objected to final cash collateral approval, asserting senior liens for roughly $154,000 of unpaid taxes for tax periods 2022 through 2025. The objection was pending when the plan was filed; the confirmation order resolves it.
• Paragraph 29 of the final cash collateral order continues to govern the tax claims. The liquidating trustee's deadline to object is 90 days from the effective date; absent a timely objection, delinquent claims for tax year 2025 and prior are deemed allowed and paid from the Texas tax reserve within 30 days after that deadline, and 2026 taxes are paid in the ordinary course as they come due without any need for the authorities to amend their claims to reflect certified 2026 amounts.
• If an objection is filed, undisputed amounts are distributed from the reserve and disputed amounts stay in it, releasable only by court order or agreement with the taxing authorities.
• The tax claims accrue post-petition interest under applicable non-bankruptcy law and the Bankruptcy Code through payment in full, and their liens are retained against the Texas tax reserve and against cash collateral on hand from the sale of collateral that secured them until the claims and interest are paid in full. The trustee must continue segregating the reserve, which may not be paid to any other creditor until the tax claims are satisfied, and the $100 minimum distribution threshold does not apply to the taxing authorities.

Executory Contracts and Leases

• All executory contracts and unexpired leases are deemed automatically rejected as of the effective date unless previously assumed or rejected, expired or terminated by their own terms, the subject of a motion pending as of the confirmation date, identified in the plan supplement for assumption, or an insurance policy.
• Rejection damages proofs of claim must be filed within 30 days after the effective date or be forever disallowed, barred and unenforceable, with no distributions on untimely claims.
• Most of the work is already done: under a 14-day negative notice rejection procedures order, three omnibus rejection orders and subsequent notice-based orders, the debtors rejected all store and office leases and 69 unexpired executory contracts by April 2, 2026, substantially reducing administrative costs.
• All employment and severance agreements and policies, and all employee compensation and benefit plans, policies and programs, including savings, retirement, health care, disability, severance, incentive and life and AD&D insurance plans, terminate as of the effective date to the extent not already terminated.

Insurance

• All insurance policies in effect on the effective date remain in full force and are deemed assumed under sections 105 and 365, including the D&O liability policies and any tail policy, and are not rejected under the plan; the confirmation order constitutes both approval of the assumption and a determination that no debtor default exists under any policy.
• The trustee may pay premiums to maintain the policies through the end of the policy period applicable on the effective date and may not terminate them earlier without the consent of the liquidating trust or the oversight committee.
• Confirmation does not discharge, release, impair or modify insurer obligations, including indemnity obligations, under the assumed policies; each such indemnity obligation is treated as an assumed executory contract requiring no proof of claim, administrative claim or cure amount claim. The plan conditions that treatment on notice of the claim to the debtors or, after the effective date, the liquidating trustee and to any other insured, and reserves the rights of the debtors, any insured and the trust to dispute the indemnity obligation. Nothing in the plan impairs the enforceability of coverage for any causes of action, including the litigation claims, non-released claims against present and former officers and directors, and commercial tort claims.

Professional Fees and Statutory Fees

• Final fee applications are due no later than 45 days after the effective date, served on counsel to the debtors, the committee and the liquidating trust and on the U.S. Trustee; objections are due within 21 days after each application is filed, absent court order or agreement with the requesting professional. The trustee pays allowed professional fee claims from liquidating trust proceeds as soon as practicable after entry of a final order awarding them.
• Estimated unpaid professional fees as of June 30, 2026, with July and August 2026 budgeted amounts: Mandelbaum Barrett PC, debtors' counsel, $200,000 unpaid against $822,412 paid and $1,022,412 total accrued; SierraConstellation Partners, LLC, debtors' financial advisor, $80,000 unpaid against $450,265 paid and $530,265 total; Hilco IP Services, LLC, intangible asset disposition consultant, no unpaid amount against $850,000 paid and total; Fox Rothschild LLP, committee counsel, $60,000 unpaid against $717,172 paid and $777,172 total; and Emerald Capital Advisors, committee financial advisor, $30,000 unpaid against $324,263 paid and $354,263 total.
• The committee's and debtors' professionals may be reasonably compensated for post-effective-date work preparing, filing and prosecuting final fee applications. The debtors believe there are no unpaid ordinary course professional claims.
• Quarterly U.S. Trustee fees due before the effective date are paid in cash on the effective date; thereafter the debtors and the liquidating trust are jointly and severally liable for all quarterly fees in each case until it is closed, dismissed or converted. Those fees are allowed without any proof of claim or request for payment, and the U.S. Trustee is not treated as granting any release under the plan; the debtors file monthly operating reports through the effective date and the debtors, the trust or the trustee file post-confirmation quarterly reports for each case thereafter.

Distributions

• The liquidating trustee, or a third-party distribution agent it engages, makes distributions on allowed claims under Article 2 of the plan, in U.S. dollars by check drawn on a domestic bank or by wire from a domestic bank. All distributions are indefeasible, final and free and clear of liens, claims, encumbrances, charges and other interests.
• Minimum distribution: no distribution of less than $100 is made; amounts below that are held for the recipient until successive distributions aggregate to $100, and if they never do, the funds revert to the estates for redistribution under the plan. If the cash available for final distribution is less than the cost of distributing it, the trust may donate the funds to an unaffiliated charity of its choice.
• Disputed claims reserve: on each distribution date the trustee deposits cash equal to what holders of disputed claims would receive if allowed in full, or the lower amount the holder has agreed to in writing, and for unliquidated or contingent claims the greater of $1 and any amount the court reserves on motion. The reserve is established as soon as practicable after the effective date if required, with no funding obligation until, at the latest, immediately before a distribution to holders of allowed claims in the same class as the disputed claims.
• No post-petition interest accrues or is paid on any claim, and no holder is entitled to interest accruing on or after the petition date, absent contrary provision in the financing orders, the plan or the confirmation order or a requirement of applicable law.
• Distributions unclaimed for 90 days after a distribution date, including checks returned undeliverable or never negotiated, are cancelled and the underlying claims deemed forfeited and expunged without further order, with the funds redistributed under the plan.
• No distribution is made on an allowed claim payable under one of the debtors' insurance policies until the holder exhausts its remedies under that policy; where an insurer satisfies a claim in whole or in part, the corresponding portion may be expunged on 21 days' notice to the claimant.
• The trustee may set off or recoup against distributions under section 553 on 14 days' docketed notice to the holder, but nothing limits a non-residential real property lease counterparty's own setoff and recoupment rights, including against a security deposit and in claims reconciliation; the trust must give any current or former lease counterparty 21 days' notice and an opportunity to object before removing, reducing or setting off against its claim, and landlord rights in letters of credit, security deposits and surety bonds are unaffected.

Claims Objections

• The debtors or the liquidating trustee may object to the amount or validity of any claim within 180 days after the effective date, subject to one or more extensions the court may grant on a motion filed before the period expires. The debtors bear objection responsibility before the effective date and the trustee after it, and no party is prejudiced from seeking an extension.
• A class action claimant commenced an adversary proceeding against the debtors on March 12, 2026, Sek v. Francesca's Acquisition (Adv. No. 26-11314); the debtors answered and the pretrial conference has been adjourned from time to time.
• The debtors have not yet evaluated which claims will be objected to and reserve all rights.
• Some claims drop out without an objection: scheduled claims marked disputed, contingent or unliquidated for which no proof of claim was filed are disallowed and expunged on the effective date; scheduled claims corresponding to a timely filed proof of claim are expunged as superseded, with the later claim still subject to objection; and proofs of claim filed after the applicable bar date are disallowed on notice and an opportunity to object unless deemed timely filed by a final order before confirmation.

Conditions Precedent

• Confirmation-date conditions: entry of a confirmation order that authorizes implementation of the plan, approves the other settlements, transactions and agreements to be effected under it, finds the plan complies with the Bankruptcy Code and was proposed in good faith and not procured by fraud, and approves the liquidating trust agreement.
• Effective-date conditions: the confirmation order has become a final order; it has authorized and approved appointment of the liquidating trustee and the oversight committee; the debtors have sufficient cash on hand to pay all allowed administrative expense claims; the debtors have funded the professional fee reserve; and the confirmation order has effectuated transfer of all liquidating trust assets to the trust.
• Waiver: any condition may be waived or modified in whole or in part without further court approval, but only with the consent of both the debtors and the creditors' committee.

Wind-Down and Dissolution

• After the effective date the debtors continue in existence through the trustee's activities to complete the liquidation of assets, wind up affairs and file tax returns, and are deemed dissolved for all purposes upon entry of an order closing the last of the cases, with no further action, filing or payment required.
• The debtors' board is dissolved on the effective date, its members released from further obligation or duty, though nothing in that provision waives or releases claims against current or former directors, officers, shareholders, members, managers, employees, affiliates or insiders, and the trustee reserves all rights to pursue the causes of action.
• The creditors' committee is dissolved on the effective date and its members discharged, except that it remains in existence to review and approve professionals' final fee applications.
• The debtors, the trust or the trustee will seek authority to close the cases promptly after full administration and file the documents Bankruptcy Rule 3022 requires.

Tax Matters

• Under section 1146(a), transfers under or in connection with the plan, including post-confirmation sales or transfers of assets and any deeds, bills of sale, assignments or other transfer instruments, are exempt from document recording, stamp, conveyance, intangibles, mortgage, real estate transfer, mortgage recording, UCC filing and recording, regulatory filing and similar taxes and governmental assessments, and state and local officials must forgo collection and accept the instruments for filing and recordation without payment.
• The trustee will comply with all federal, state, provincial, local and foreign tax withholding and reporting requirements, and all distributions are subject to them.

Amendments and Governing Law

• The plan proponents may make immaterial modifications to plan documents without further court authorization, provided they file the modifications. Entry of the confirmation order approves all modifications and amendments made since the plan was filed under section 1127(a), without additional disclosure or solicitation under Bankruptcy Rule 3019.
• The debtors and the committee may jointly withdraw the plan at any time before the confirmation date and may jointly modify it consistent with section 1127 before substantial consummation. After substantial consummation, the plan and the liquidating trust agreement may be modified on the trustee's request with court approval, provided the modification does not affect the essential economic treatment of any person that objects in writing.
• New Jersey law governs, without regard to conflicts principles, except where federal law supplies the rule or an agreement specifies otherwise. The court retains jurisdiction over all matters arising out of or related to the cases and the plan to the fullest extent permitted by law.
• Each plan term is valid and enforceable, integral and not deletable or modifiable without the plan proponents' consent, and non-severable and mutually dependent; where the confirmation order and the plan or plan supplement irreconcilably conflict, the confirmation order controls to the extent of the conflict. If the confirmation order is vacated, the plan is null and void and nothing in it waives or releases claims against or interests in the debtors, prejudices any holder's rights or the debtors' rights, remedies or claims, or constitutes an admission against interest.
• The confirmation order is a final order and the appeal period runs from its entry.