Francesca's Acquisition - Chapter 11 Plan Terms

Plan Terms

Overview

• The Debtors and the Creditors' Committee are the Plan Proponents of the Combined Disclosure Statement and Joint Plan of Liquidation (the "Plan"), which contemplates the orderly wind-down of the Debtors.
  • The Debtors — Francesca's Acquisition, LLC; Francesca's Operations, Inc.; Francesca's Administrative Management, Inc.; and Francesca's IP Debtors, Inc., each wholly owned in a direct chain beneath Francesca's Acquisition — were a specialty retailer of women's apparel and accessories focused on a Gen Z and multigenerational customer, operating approximately 400 boutiques across 45 states together with an e-commerce website at francescas.com, and are headquartered in Houston. Non-debtor MAS Acquisition, LLC owns 100% of Francesca's Acquisition.
    • Founded in Houston in 1999, the business grew to approximately 200 stores by 2010, completed an initial public offering in 2011 and peaked around 2016-2017 at approximately 700 stores and over $500 million in sales. In 2025, 66% of products consisted of apparel and jewelry, with the remainder gifts and accessories, and e-commerce made up approximately 13% of sales.
  • The Debtors filed voluntary chapter 11 petitions on Feb. 5, 2026, in the U.S. Bankruptcy Court for the District of New Jersey (Newark), jointly administered under Case No. 26-11312 (MEH).
  • The U.S. Trustee appointed the Creditors' Committee, consisting of seven members each holding general unsecured claims against the Debtors, on Feb. 23, 2026; the Committee retained Fox Rothschild LLP as attorneys and Emerald Capital Advisors as financial advisors.
• By the time of the confirmation hearing, the Debtors will have (a) closed the section 363 sale of their intellectual property assets and (b) liquidated their inventory via court-approved Store Closing Sales.
• The Plan provides for the distribution of proceeds by a Liquidating Trustee, under which (a) all allowed administrative and priority claims are paid in full and (b) general unsecured creditors receive their pro rata share of the Liquidating Trust Proceeds.
  • The Debtors spent the early part of the cases stabilizing operations and maximizing liquidity to implement a wind-down strategy centered on continuing the prepetition Store Closing Sales and selling intellectual property assets.
  • In the view of the Debtors and the Creditors' Committee, the Plan offers holders of allowed claims the best opportunity to maximize value for recovery purposes and is therefore in the best interests of all creditors.

Prepetition Capital Structure

• As of the petition date, the Debtors had approximately $30.1 million in total secured debt, the holders of which support the Debtors' bankruptcy cases and store closing sale process. The prepetition funded-debt obligations consist of:
  • A revolving credit facility with approximately $26.1 million outstanding, comprising two tranches — the Committed Revolving A Loans and the Committed Revolving B Loans (each as defined in the Fifth Forbearance Agreement)
  • A term loan facility with approximately $4 million outstanding
• The Debtors, as borrowers, entered into the Prepetition Credit Agreement on Feb. 21, 2024 — as amended by a first amendment dated May 2, 2024, and a waiver, consent and second amendment dated Sept. 6, 2024, and as further amended from time to time — with Tiger Finance, LLC, as administrative agent and collateral agent, Second Avenue Capital Partners LLC, as funding agent (together, the "Prepetition Agents"), and the lenders party thereto (collectively with the Prepetition Agents, the "Prepetition Secured Lenders").
  • The Prepetition Secured Lenders extended a revolving, asset-based facility in the aggregate amount of up to $40 million and a term facility in the amount of $4.5 million.
  • The obligations are secured by a first priority lien on substantially all of the Debtors' assets, including all accounts, goods, equipment, inventory, fixtures, and intangible assets including intellectual property.
• The Debtors were in default under the Prepetition Credit Agreement as of the petition date. Following certain events of default, the parties entered into forbearance agreements from time to time, most recently on Feb. 4, 2026, when the Debtors and the Prepetition Secured Lenders entered into the Fifth Forbearance Agreement and a seventh amendment to the credit agreement.

Sale of Intellectual Property Assets

• The Debtors entered the cases intending to sell their intellectual property assets while also seeking bids from potential qualified going-concern buyers. The Court entered the Bid Procedures Order on Feb. 12, 2026, one week after the petition date, which set:
  • A bid deadline of March 5, 2026, an auction date, if needed, of March 9, 2026, and a sale hearing on March 12, 2026
  • A sale objection deadline of March 6, 2026
  • Authority for the Debtors to enter into a stalking horse agreement with Stand Out for Good, Inc. (the "Stalking Horse Bidder")
• Hilco began marketing the intellectual property assets prepetition, in addition to marketing the Debtors' assets as a going concern, to over 48,000 marketing contacts, and 28 parties accessed the data room to review the Debtors' holdings and financial information.
  • No qualified bids were received other than that of the Stalking Horse Bidder, and the Debtors canceled the scheduled auction and filed a Notice of Successful Bidder and Designation of Contracts on March 10, 2026.
  • No going-concern bidders emerged, and thus no leases or non-intellectual property-related contracts were assumed.
• The Court entered the IP Sale Order on March 12, 2026, approving the sale of the intellectual property assets to the Stalking Horse Bidder for a purchase price of $7 million, free and clear of all liens, claims, and encumbrances, after finding notice and consideration sufficient, the negotiations properly arm's-length and procedurally fair, and having been conducted in good faith.
  • Assets sold under the Intellectual Property Asset Purchase Agreement included (i) all trademarks, copyrights and domain names, (ii) social media accounts, (iii) brand and product design collateral, (iv) toll-free telephone numbers, (v) customer data and (vi) goodwill.

Store Closing Sales

• On the petition date, the Debtors moved to continue the chain-wide "going out of business" Store Closing Sales, which commenced prepetition, under a consulting agreement among Tiger, SB360 Capital Partners, LLC and GA Retail Solutions, LLC; interim relief was granted on Feb. 11, 2026.
• Following negotiations spanning several weeks to manage the concerns of several constituencies, the Court entered the Final Store Closing Sale Order on March 26, 2026, 49 days after the petition date. Landlord groups, the Creditors' Committee and certain government entities raised concerns, resulting in informal and formal objections:
  • Landlords raised concerns regarding signage and "going dark" provisions, which the Debtors addressed with language in the Final Store Closing Sale Order addressing signage requirements, preserving shopping center operating requirements and creating dispute resolution processes to address any potential landlord compliance issues. Landlords separately sought adequate assurances based on concerns that, despite any potential profitability of the Store Closing Sales, the Debtors would become administratively insolvent; the Debtors addressed those concerns in the Stub Rent Stipulation.
  • The Creditors' Committee objected as to transparency in the calculation and distribution of the Store Closing Sale Consulting Fees; the Debtors, the Committee and the consultant negotiated provisions for periodic reporting, post-Store Closing Sale reconciliations, and a mechanism for the Committee to object to the fees.
  • Government entities raised concerns as to potential clashes between the sale procedures and laws regulating advertising, consumer protection, public safety and tax revenue, which the Debtors addressed by setting forth procedures for government entities to raise compliance issues without interrupting the sales.
• March 29, 2026, was the last day of business at the Debtors' stores, and the Debtors closed all stores by March 31, 2026.

Cash Collateral and Stub Rent

• The Debtors obtained interim cash collateral relief on Feb. 8, 2026, to finance wind-down efforts. Final cash collateral relief became inextricably tied with Store Closing Sale and stub rent issues.
  • Landlords and the Creditors' Committee objected to final relief because proceeds of the Store Closing Sales were used in part to pay down the Prepetition Secured Lenders while many landlords were forced to continue honoring their leases without payment, to allow the sales to continue and to finance the chapter 11 cases.
  • Landlords and the Committee filed omnibus objections covering their interrelated concerns as to final cash collateral relief, stub rent and final Store Closing Sale relief throughout early March 2026 (the "Consolidated Objections").
• At a March 12, 2026, status hearing, the Debtors, objecting landlords and the Creditors' Committee reached broad terms of agreement on the disposition of final Store Closing Sale relief, final cash collateral relief and stub rent issues. The Court entered the Stub Rent Stipulation on March 18, 2026, which:
  • Established a $2,832,751.51 reserve carved out of the cash collateral budget to address stub rent (the "Stub Rent Reserve")
  • Provided that the Prepetition Agents agreed the amounts in the Stub Rent Reserve would not be applied to pay down balances on the Prepetition Secured Loans
  • Provided that the parties would agree on the mechanism for the timing and distribution of stub rent amounts prior to or in conjunction with entry of the Final Cash Collateral Order
  • In exchange, the objecting landlord parties agreed to entry of the final Store Closing Sale Order
• The Court adjourned the final cash collateral hearing several times, most recently until April 16, 2026, to allow the parties to continue negotiations based on a cash collateral budget proposed after the conclusion of the Store Closing Sales.
• Attorneys for various tax authorities in Texas objected to final cash collateral approval, asserting senior liens for unpaid ad valorem taxes of about $154,000 for the 2022-2025 tax periods. The objection remained pending at the time of the Plan's filing, though the Debtors believe it will be resolved by the confirmation hearing.

Global Settlement

• The Debtors, the Prepetition Secured Lenders and the Creditors' Committee attended a May 13, 2026, mediation before the Hon. Vincent F. Papalia to attempt to resolve cash collateral and more global issues. Although the parties did not reach a resolution at mediation, they eventually reached the Global Settlement, memorialized in the proposed Final Cash Collateral Order and the proposed Settlement Order, the salient terms of which provide:
  • The Prepetition Secured Lenders shall pay the Debtors' estates $3 million, comprising proceeds of cash collateral previously applied to the Term Loan Claims ($2.3 million) and Tranche B Claims ($700,000).
  • The Prepetition Secured Lenders shall receive releases as set forth in the settlement agreement.
  • The Prepetition Secured Lenders shall fully fund the Carve Out and the Carve Out Reserves in the amount of $1,015,000, including:
    • $715,000 on account of all accrued and unpaid fees and expenses of any Professional and the claims agent as set forth in the budget attached to the Final Cash Collateral Order
    • All accrued and unpaid Clerk and U.S. Trustee fees, estimated by the Debtors at no more than $125,000, and Chapter 7 Trustee fees of $50,000, that are subject to the Carve Out; upon the effective date, the $50,000 reserved for a chapter 7 trustee would be paid to the Liquidating Trust
    • $125,000 on account of the Post-Carve Out Reserve
  • The Prepetition Secured Lenders shall fund from cash collateral on hand 503(b)(9) claims in an amount estimated by the Debtors at no more than $200,000.
  • The Prepetition Secured Lenders funded a cash reserve from cash collateral in the aggregate amount of $2,832,751.51, which has been fully distributed and paid to the Debtors' landlords on account of all stub rent claims.
• The Debtors' estates shall retain any and all claims and causes of action, including (1) Avoidance Actions; (2) commercial tort claims as defined in Article 9 of the UCC; (3) claims against present or former officers and directors, including direct or derivative claims against current and former officers, directors, shareholders, members, managers, employees, affiliates or insiders, including for breach of fiduciary duty or aiding and abetting breach of fiduciary duty, or under any directors and officers or fiduciary insurance policies (including for bad faith); (4) the non-exclusive right to seek a determination of any tax, fine or penalty relating to a tax under section 505; (5) any tax refunds, including tariff refunds; and (6) the Debtors' interest in the Discover Financial Services merchant class action litigation and the Google LLC advertising antitrust litigation.
  • With respect to estate-recovered proceeds of items (5) and (6) (the "Shared Recoveries"), proceeds shall be distributed to the Prepetition Secured Lenders, on account of the remaining outstanding balance of the Prepetition Loan Obligations as of the date of any such recovery and payment, and the estates, in accordance with the following waterfall:
    • The Prepetition Secured Lenders receive the first $500,000 in net Shared Recoveries proceeds, if any
    • The estates receive the next $500,000 in net Shared Recoveries proceeds, if any
    • The Prepetition Secured Lenders and the estates each share 50% in all further net Shared Recoveries proceeds thereafter, if any
  • Any settlement, sale or resolution of the Shared Recoveries must be approved by each of the estates, the Committee and the Prepetition Secured Lenders, provided that approval shall be considered in good faith and resolved within a commercially reasonable amount of time not to exceed five business days.
• If the Plan is not confirmed and the cases are dismissed or converted to chapter 7, the settlements provided for in the Plan — except for the Global Settlement and the Settlement Order — will be void.

Plan Funding and Liquidating Trust

• The Plan shall be funded by a combination of the proceeds of the sale and the proceeds from the liquidation of remaining assets, including accounts receivable, as well as the $3 million Settlement Payment, pursuant to the Final Cash Collateral Order and the Settlement Order.
  • The Liquidating Trustee shall utilize the Liquidating Trust Proceeds to make distributions to holders of allowed claims after reserving for disputed claims.
  • The Plan contemplates the distribution of proceeds from the sale and from the Store Closing Sales followed by the wind-down of the Debtors' remaining estates.
• On or prior to the effective date, the Liquidating Trust shall be established pursuant to the Liquidating Trust Agreement to provide a mechanism for the economical liquidation of the estate and distribution of the proceeds to creditors. On the effective date, the Liquidating Trust Assets, including the estates' assets and all Causes of Action, will be assigned and delivered to and vest in the Liquidating Trust and will be managed by the Liquidating Trustee.
  • The Confirmation Order shall provide for the appointment of the Liquidating Trustee, who shall be deemed the estates' exclusive representative in accordance with section 1123 and shall have all powers, authority and responsibilities specified under sections 704 and 1106.
  • The Liquidating Trustee shall serve without a bond and shall be governed by the Plan and the Liquidating Trust Agreement.
  • On the effective date, the Liquidating Trustee shall succeed to all of the rights of the Debtors and the estates, with all powers necessary to protect, conserve and liquidate all assets, including control over (and the right to waive) all attorney-client, work-product, accountant-client and other evidentiary privileges relating to the assets that belonged to the Debtors prior to the effective date.
  • The Liquidating Trustee may determine whether to bring, settle, release or compromise Causes of Action, Avoidance Actions and Litigation Claims, and may compromise and settle claims by and against the Debtors and their estates, in each case without the need for Court approval — subject in both cases to a $250,000 threshold. Compromises of Causes of Action, Avoidance Actions and Litigation Claims for which the amount in controversy exceeds $250,000 must be approved by the Oversight Committee, or by the Court to the extent the Oversight Committee objects; compromises of claims where the proposed allowed amount exceeds $250,000 must be approved by the Oversight Committee, and if it declines to approve a compromise the Liquidating Trustee recommends, the Liquidating Trustee may seek Court approval over the Oversight Committee's objection.
  • Payment for the Liquidating Trustee and its professionals shall come from the Liquidating Trust Proceeds and any additional recoveries by the estates after confirmation.
  • If the Liquidating Trustee dies, is terminated or resigns, the Oversight Committee shall designate a successor; if it is unable to do so, the Court may appoint a successor from any candidate proposed by any party in interest.
  • The Liquidating Trustee and its designees, employees, professionals, agents and representatives shall not be liable for acts or omissions in their respective capacities other than for willful misconduct, gross negligence or fraud as determined by final order, may consult with and rely in good faith on the advice of attorneys, accountants, financial advisors and agents (and are under no obligation to do so), and shall be indemnified and held harmless by the estates against all liabilities, losses, damages, claims, costs and expenses, including attorneys' fees, arising from the performance of their duties, subject to the same willful misconduct, gross negligence and fraud carve-out.
  • The Liquidating Trust Beneficiaries are the holders of allowed general unsecured claims. The identity of the Liquidating Trustee and the Liquidating Trust Agreement will be disclosed in the Plan Supplement.
• As soon as reasonably practicable following the effective date, the Liquidating Trustee shall sell or otherwise dispose of and convert to cash any non-cash assets in such manner as it determines is in the best interests of the estates and holders of allowed claims. Not less than once every 90 days until the cases are closed, the Liquidating Trustee shall file all post-effective date reports and pay from the Liquidating Trust Proceeds all post-effective date fees assessed under 28 U.S.C. § 1930, together with applicable interest.

Oversight Committee

• On or after the effective date, the Oversight Committee shall be appointed and shall consist of holders of allowed Class 4 claims willing to serve, with members selected by the Creditors' Committee, or the Liquidating Trustee as the case may be, upon consultation with the U.S. Trustee.
  • The Oversight Committee shall not exceed seven members, shall have the authority specified in the Plan and Liquidating Trust Agreement, and shall act by majority vote.
  • The Liquidating Trustee shall consult with and provide information to the Oversight Committee with respect to any material action to be taken or not taken.
  • Members shall serve without compensation, except for the reimbursement of reasonable, actual costs and expenses incurred in connection with their duties.
  • Reasonable expenses of Oversight Committee members may be paid by the Liquidating Trustee upon presentation of proper documentation without the need for Court approval. Where the Oversight Committee declines to approve a settlement proposed by the Liquidating Trustee and the Liquidating Trustee elects to seek Court approval over that objection, the Oversight Committee may retain attorneys to prosecute its objection, the reasonable costs of which will be paid by the Liquidating Trustee in the same manner as the Liquidating Trustee's own professionals.
  • Members shall not be liable for any act done or omitted while acting in good faith and in the exercise of business judgment, and in no event except for gross negligence or willful misconduct in the performance of their duties, and shall be indemnified by the estates other than for willful misconduct, gross negligence or fraud as determined by final order.

Substantive Consolidation

• The Plan is premised upon, and shall serve as a motion for entry of an order approving, the deemed substantive consolidation of the Debtors' estates and chapter 11 cases for the limited purposes of voting and distribution only. If authorized, on the effective date:
  • All assets and liabilities of the Debtors will be deemed merged or treated as a single pool of assets for the limited purposes of voting and distribution
  • Any obligation of a Debtor and any guarantee thereof by another Debtor shall be deemed one obligation, and any such guarantee eliminated; all claims based upon guarantees of collection, payment or performance made by one Debtor as to the obligations of another shall be released and of no further force and effect
  • Each claim scheduled, filed or to be filed against any Debtor will be deemed filed only against Francesca's Acquisition and deemed a single claim against and a single obligation of Francesca's Acquisition
  • Any joint or several liability of the Debtors will be deemed one obligation of Francesca's Acquisition
• The limited consolidation shall not affect the rights of any holder of a secured claim with respect to its collateral and shall not prejudice the Litigation Claims, which shall survive entry of the Confirmation Order — subject to the releases in Article 6 — as if there had been no deemed substantive consolidation.
• If no objection to the deemed substantive consolidation is timely filed and served by a holder of an impaired claim by the confirmation objection deadline, and the Debtors meet their burden of introducing evidence that consolidation is merited under applicable standards, the Confirmation Order may be entered deeming the Debtors consolidated for the limited purposes of voting and distribution; if objections are timely filed, a hearing on the request will be scheduled to coincide with the Confirmation Hearing. If the Court authorizes consolidation of fewer than all of the estates, the Plan shall be treated as a separate plan for each Debtor not consolidated, and the Debtors shall not be required to resolicit votes.
• The Debtors believe consolidation is merited because:
  • The Debtors are interrelated and operated as a consolidated enterprise, including through use of a centralized cash management system, by making policy and management decisions from their corporate headquarters and through common directors and officers, by agreeing to be jointly and severally liable for various obligations or serving as guarantors for one another, and by publicly touting the integrated nature of their operations on their website and in their corporate logo
  • The benefits of consolidation outweigh the harm, if any, to creditors, particularly given the size of the Intercompany Claims; the only class affected is Class 4, one of whose sources of recovery is the proceeds of Litigation Claims, which cannot reasonably or practicably be allocated on a debtor-by-debtor basis

Classification and Treatment of Claims

• In accordance with section 1123(a)(1), Administrative Expense Claims, Priority Tax Claims and Professional Fee Claims are not classified:
  • Administrative Expense Claims — Unimpaired. All allowed Administrative Expense Claims other than Professional Fee Claims and Ordinary Course Professional Claims shall be paid in cash by the Liquidating Trustee from the Liquidating Trust Proceeds, in such amounts as are incurred in the ordinary course of the liquidation or as allowed by the Court, as soon as practicable following the later of the effective date or entry of a final order allowing such claim, upon such other ordinary course terms, or as agreed with the Liquidating Trustee. The Debtors estimate unpaid Administrative Expense Claims total $200,000, not including Professional Fee Claims but including section 503(b)(9) claims. Requests for payment of Administrative Expense Claims (other than Professional Fee Claims and claims of governmental units under section 503(b)(1)(B), (C) or (D)) that arose after the Administrative Expense Claims Bar Date must be filed with the Claims and Noticing Agent and served on the Liquidating Trustee no later than 30 days after the effective date; holders that do not comply are forever barred from asserting such claims against the Debtors, their estates or their assets. Absent an objection by the Claims Objection Deadline — the first business day 180 days after the effective date — an Administrative Expense Claim is deemed allowed in the amount requested. Where disputed Administrative Expense Claims exist on the effective date, the Liquidating Trustee must at all times hold cash equal to the portion of the Disputed Claims Reserve attributable to them.
  • Priority Tax Claims — Each holder shall receive, in full and final satisfaction, cash equal to the allowed amount to be paid from the Liquidating Trust Proceeds in accordance with section 1129(a)(9)(C), or such other treatment as agreed in writing with the Liquidating Trustee. The Debtors' claims register reflects $1.2 million in priority tax claims; the Debtors have not yet evaluated the validity of these claims and believe they will be subject to objection and reduction.
  • Professional Fee Claims — Allowed Professional Fee Claims shall be paid from the Professional Fee Reserve, a reserve of cash funded by the Debtors and maintained by the Liquidating Trustee in an amount equal to estimated Professional Fee Claims.
• Class 1 (Pre-Petition Agent Claims) — Unimpaired; deemed to accept. The holder shall receive the net proceeds of the sale of the assets on which it has a lien in accordance with the Final Cash Collateral Order and Settlement Order and shall not receive any further distribution from estate assets. Nothing prohibits the Pre-Petition Agents from seeking recovery on account of their claims from non-estate assets.
• Class 2 (Other Secured Claims) — Unimpaired; deemed to accept. Each holder shall receive either (i) delivery of the collateral securing the claim, (ii) the net proceeds, if any, of the sale or other disposition of the assets on which such holder has a lien, or (iii) such other, less favorable treatment as agreed in writing with the Liquidating Trustee. Any deficiency claim arising on account of the lack of collateral or otherwise resulting from such treatment shall be treated as a Class 4 general unsecured claim.
• Class 3 (Priority Non-Tax Claims) — Unimpaired; deemed to accept. Each holder shall receive (a) cash equal to the allowed amount in accordance with section 1129(a)(9)(B) or (b) such other treatment as agreed in writing with the Debtors or the Liquidating Trustee.
• Class 4 (General Unsecured Claims) — Impaired; entitled to vote. Each holder shall receive its pro rata share from the remaining portion of the Liquidating Trust Proceeds, after satisfaction in full of senior claims, determined by a formula, the numerator of which is the then unsatisfied amount of such holder's allowed Class 4 claim and the denominator of which is the aggregate unsatisfied amount of the remaining allowed Class 4 claims.
• Class 5 (Intercompany Claims) — Impaired; deemed to reject. Holders shall receive no recovery as a result of the deemed substantive consolidation of the estates for purposes of voting and distribution.
• Class 6 (Interests) — Impaired; deemed to reject. Interests shall be canceled, and holders shall not receive or retain any property under the Plan on account of such interests.
• 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 extension on motion. Scheduled claims designated as disputed, contingent or unliquidated for which no proof of claim was filed are deemed disallowed and expunged as of the effective date, scheduled claims superseded by a timely filed proof of claim are expunged from the claims register, and proofs of claim filed after the applicable bar date are deemed disallowed without further order unless deemed timely by final order on or before confirmation. In no event shall the aggregate value received or retained on account of an allowed claim exceed 100% of that claim.

Assets, Claims Pool and Bar Dates

• The Debtors' schedules, filed March 9, 2026, reflect assets including approximately (i) $3.19 million in cash or cash equivalents, (ii) $2.1 million in deposits and prepayments, (iii) $2.4 million in accounts receivable, (iv) $25 million in inventory and finished goods, (v) $9.7 million in office fixtures and equipment and (vi) $1.1 million in a federal net operating loss.
• The schedules reflect liabilities of approximately (i) $28.1 million in secured debt, (ii) $0 in priority unsecured claims and (iii) $62 million in general unsecured claims, excluding intercompany payables. Those figures exclude a $1,091,465,288 intercompany receivable on the Debtors' books owing from Francesca's Operations, Inc. to Francesca's Administrative Management, Inc.
• In total, the claims register plus scheduled claims reflects about $228 million in general unsecured claims and about $3 million in filed priority claims. The Debtors have not had an opportunity to compare or reconcile the filed claims against their books and records, and believe the majority of filed claims supersede the claims reflected in the schedules.
• The general claims bar date (other than for governmental entities and Administrative Expense Claims) was April 28, 2026; the Administrative Expense Claims Bar Date expired May 28, 2026, at 5 p.m. ET pursuant to the Amended Bar Date Order; and the Governmental Bar Date is Aug. 20, 2026.

Distributions

• Distributions shall be made by the Liquidating Trustee, or a Distribution Agent it engages, in U.S. dollars by check drawn on a domestic bank or by wire transfer, are indefeasible, and are free and clear of liens, claims, encumbrances, charges and other interests. Claims asserted in foreign currencies shall be converted at the exchange rates published by The Wall Street Journal on the confirmation date. Distributions are mailed to the address on the holder's proof of claim or, absent one, the address in the schedules, and are deemed made on the date of mailing regardless of receipt.
• Unless otherwise provided in the Financing Orders, the Plan or the Confirmation Order, or required by applicable law, post-petition interest shall not accrue or be paid on any claim.
• No distribution of less than $100 shall be made; such amounts are retained by the Liquidating Trustee until successive distributions aggregate to $100, and if they never do, revert to the estates for redistribution. If the cash available for final distribution is less than the cost of distributing it, the Liquidating Trust may donate the funds to an unaffiliated charity of its choice.
• Distributions unclaimed for 90 days after a distribution date — including checks that fail to be cashed or are returned as undeliverable — shall be canceled and the related claims deemed forfeited and expunged without further action or Court order, with the funds redistributed under the Plan.
• Each creditor must provide valid tax information if requested by the Liquidating Trustee as a condition to payment. Any creditor that fails to respond to a Tax Information Request within 90 days of the date posted on the request forfeits all distributions it would otherwise be entitled to, and the forfeited funds revert to the Debtors for disbursement under the Plan.
• No payment or distribution shall be made on account of a disputed claim, or any portion of one, unless and until it is allowed by final order. On each distribution date the Liquidating Trustee shall deposit into a Disputed Claims Reserve cash equal to the distributions that would have been made if the disputed claims were allowed in full, or, for unliquidated or contingent claims, the greater of $1 and such other amount as the Court reserves; the Court may estimate disputed claims under section 502(c). No holder of a disputed claim may receive more than the amount reserved for it, and the reserve is treated as a disputed ownership fund under Treasury Regulation section 1.468B-9.
• If a holder receives payment or satisfaction of its claim from a party other than the Debtors or the Liquidating Trust, the claim is reduced accordingly without an objection being filed, is disallowed if satisfied in full, and any recovery exceeding a single full recovery must be repaid to the Liquidating Trust within 14 calendar days. The Liquidating Trustee may, but need not, set off against or recoup from any claim any claims, defenses or causes of action it may have, without waiver.

Professional Fees

• The Debtors retained general bankruptcy counsel Mandelbaum Barrett PC; SierraConstellation Partners LLC to provide restructuring personnel and chief financial officer services; Hilco IP Services LLC to market and sell the Debtors' assets; and Stretto, Inc. as claims and noticing agent.
• The Debtors estimate unpaid Professional Fee Claims as of June 30, 2026, including estimated budgeted fees and expenses for July and August 2026, as follows:
  • Mandelbaum Barrett PC, counsel to the Debtors — $822,412 accrued unpaid, plus $200,000 estimated, for $1,022,412 total
  • SierraConstellation Partners, LLC, financial advisor to the Debtors — $450,265 accrued unpaid, plus $80,000 estimated, for $530,265 total
  • Hilco IP Services, LLC, intangible asset disposition consultant — $850,000 total
  • Fox Rothschild LLP, counsel to the Creditors' Committee — $717,172 accrued unpaid, plus $60,000 estimated, for $777,172 total
  • Emerald Capital Advisors, financial advisor to the Creditors' Committee — $324,263 accrued unpaid, plus $30,000 estimated, for $354,263 total
• Final Fee Applications may be made any time after the confirmation date but must be filed no later than the Professional Fee Claims Bar Date, with objections due to be filed and served on the Liquidating Trustee, the requesting Professional and the U.S. Trustee no later than 21 days from the date each application is filed. Allowed amounts are determined by the Court after notice and a hearing. The Debtors do not believe there are any unpaid Ordinary Course Professional Claims, and the Liquidating Trustee has no obligation to pay fees incurred by an Ordinary Course Professional on or after the effective date absent a new engagement agreement.
• Professionals employed by the Debtors and the Creditors' Committee shall be entitled to reasonable compensation and reimbursement of actual, necessary expenses for post-effective date activities relating to the preparation, filing and prosecution of Final Fee Applications.

Executory Contracts and Wind-Down

• Because no going-concern bidder emerged, the Debtors rejected all of their store and office leases and 69 of their unexpired executory contracts by April 2, 2026, significantly reducing administrative costs, using three omnibus rejection orders together with the fourteen-day negative notice process established by the Rejection Procedures Order.
• On the effective date, except as otherwise provided in the Plan, each executory contract and unexpired lease not previously assumed, assumed and assigned, or rejected pursuant to Court order or applicable Bankruptcy Code provisions, or that has not expired or otherwise terminated, shall be deemed automatically rejected.
• To the extent not previously terminated, all employment and severance agreements and policies, and all employee compensation and benefit plans, policies and programs applicable generally to employees, independent contractors or officers in effect on the effective date — including all savings plans, retirement plans, health care plans, disability plans, severance benefit plans, incentive plans and life, accidental death and dismemberment insurance plans — shall be terminated as of the effective date.
• Following the effective date, the Debtors, through the activities of the Liquidating Trustee, shall continue in existence for the purposes of, among other things, completing the liquidation of assets, winding up affairs and filing appropriate tax returns; upon entry of an order closing the cases, the Debtors shall be deemed dissolved for all purposes.
• Upon the effective date, the Debtors' board of directors shall be dissolved, and its members shall have no further obligation or duty with respect to the Debtors, the estates or the cases.
• On the effective date, the Creditors' Committee shall be deemed dissolved and its members released and discharged from all duties and obligations arising from or related to the cases, provided that the Committee shall remain in existence for the purpose of reviewing and approving Final Fee Applications of Professionals.

Preserved Causes of Action

• The Debtors reserve the rights of the Liquidating Trustee to prosecute all Causes of Action not otherwise released in the Plan, the Final Cash Collateral Order or the Settlement Order, including (i) any claims or causes of action listed in the Debtors' schedules or statements of financial affairs, (ii) Avoidance Actions and (iii) prepetition claims against present or former officers and directors of the Debtors, including for breach of fiduciary duty or aiding and abetting breach of fiduciary duty, or under any directors and officers or fiduciary insurance policies (the "Litigation Claims").
  • Except as otherwise provided in the Plan, including the release, exculpation and injunction provisions, all claims or causes of action the Debtors or the estates may have against any person or entity are preserved, including all Causes of Action under sections 502, 510, 522(l), 522(h), 542, 543, 544, 545, 547, 548, 549, 550, 551 and 553.
  • Nothing in the dissolution provisions shall be construed as a waiver or release of the Debtors' current and former board of directors, officers, directors, shareholders, members, managers, employees, affiliates or insiders, except as set forth in the Plan, and the Liquidating Trustee reserves all rights to pursue the Causes of Action.
• The Debtors have not completed their investigation into prepetition transactions; further investigation will be performed by the Liquidating Trustee upon the effective date.
  • The Debtors' statements of financial affairs reflect approximately $30,797,914.37 in payments made by Francesca's Administrative Management, Inc. and $98,849,209.28 in payments made by Francesca's Operations, Inc. within the 90-day period prior to the petition date, any of which the Liquidating Trustee may seek to avoid.
• On March 12, 2026, a class action claimant commenced an adversary proceeding against the Debtors styled Sek v. Francesca's Acquisition, Adv. No. 26-11314. The Debtors filed an answer to the complaint, and the pretrial conference has been adjourned from time to time.

Releases

• Effective as of the effective date, the Debtors, their estates, successors and assigns, including any successor to the Debtors or any estates representative, including the Liquidating Trustee, shall be deemed to forever release, waive and discharge each of the Released Parties from any claim, Cause of Action, obligation, suit, judgment, damages, debt, right, remedy or liability, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, for any act or omission in connection with, relating to or arising from, in whole or in part, the Debtors, the Debtors' operations, the chapter 11 cases, the purchase, sale or rescission of the purchase or sale of any security of the Debtors, the subject matter of or transactions giving rise to any claim or interest treated in the Plan, the business or contractual arrangements between any Debtor and any Released Party, the assertion or enforcement of rights and remedies against the Debtors, the Debtors' in- or out-of-court restructuring efforts, any Avoidance Actions, or the Plan and its administration, formulation, preparation, dissemination, solicitation, negotiation, consummation and implementation, in each case taking place on or prior to the effective date.
• "Released Parties" comprise (a) the Independent D&Os, Curt Kroll and Drew Baird; (b) the Creditors' Committee, its professionals and its members, only in their capacity as such; (c) the Debtors' professionals whose retention was approved by the Court; and (d) the Prepetition Secured Lenders under the Prepetition Secured Loans.
• The following parties shall not be released under the Plan, nor under the Global Settlement: Simon Barlava; Morris Barlava; Andrew Clarke; Bridgit Lombard; Christine Kaighn; Victoria Taylor; MAS Acquisition, LLC; or any other current or former director, officer, manager, member, employee, affiliate or insider of the Debtors other than TerraMar Capital, LLC and its affiliates and/or principals ("TerraMar"), each of which shall be released other than with respect to any claims or causes of action against TerraMar and any of its representatives covered by any directors and officers' liability insurance policy, provided that any recoveries resulting therefrom shall be limited to the insurance policies, exclusive of any deductibles and costs of defense.
• In support of the releases, the Debtors note that section 1123(b)(3)(A) permits a plan to provide for "the settlement or adjustment of any claim or interest belonging to the debtor or to the estate," and that a debtor may release claims thereunder "if the release is a valid exercise of the debtor's business judgment, is fair, reasonable, and in the best interests of the estate," citing In re Spansion, Inc., 426 B.R. 114, 143 (Bankr. D. Del. 2010).
  • Courts in the Third Circuit often consider whether: (i) the released party has made a substantial contribution to the debtor's reorganization; (ii) the release is essential to the reorganization; (iii) a substantial majority of creditors support the release; (iv) there is an identity of interest between the debtor and the released party; and (v) the plan provides for payment of all or substantially all of the claims in the affected class or classes, citing In re Zenith Elecs. Corp., 241 B.R. 92, 110 (Bankr. D. Del. 1999). Not all factors must be satisfied for a court to approve a debtor release; the factors are neither exclusive nor conjunctive requirements and instead provide guidance in the court's determination of fairness, citing In re Wash. Mut., Inc., 442 B.R. 314, 346 (Bankr. D. Del. 2011).
  • The Debtors believe the releases satisfy applicable standards as a valid exercise of business judgment that is fair, reasonable and in the best interests of the estates, and that the proposed recoveries would not be possible without the Released Parties' efforts.
• Except as expressly provided otherwise in the Plan, unless a holder of a secured claim receives a return of its collateral, each holder of an allowed secured claim and of an allowed claim that is purportedly secured shall, on the effective date, turn over and release to the Debtors any property that secures or purportedly secures such claim and execute such documents as the Debtors require to evidence the release, with all claims, rights, title and interest in such property reverting to the Debtors free and clear. No distribution shall be made to any such holder unless and until it executes and delivers the release of liens, and any holder that fails to do so within 60 days of demand shall be deemed to have no further claim and shall not participate in any distribution, provided that a holder of a disputed claim is not required to deliver the release until its claim is allowed or disallowed.
• Except as set forth in the Plan, holders of claims against the Debtors are not barred or otherwise enjoined from pursuing any recovery against persons that are not Debtors.

Exculpation

• Except as otherwise specifically provided in the Plan, the Exculpated Parties shall not have or incur, and are released and exculpated from, any liability to any holder of a claim or interest, any other party-in-interest, or any of their respective members, directors, officers, managers, trustees, employees, advisors, attorneys, professionals, agents, partners, stockholders or affiliates, or their successors or assigns, for any act or omission in connection with, relating to or arising out of the chapter 11 cases, the formulation, negotiation or implementation of the Plan, solicitation of acceptances, the pursuit of confirmation, the confirmation or consummation of the Plan, or the administration of the Plan or the property to be distributed under it.
  • The exculpation excludes acts or omissions that are the result of fraud, gross negligence, willful misconduct or a breach of fiduciary duty, in each case as determined by a final order entered by a court of competent jurisdiction, and the exculpated parties shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities under the Plan.
  • Nothing in the provision exculpates acts or omissions prior to the petition date or post-effective date.
• "Exculpated Parties" comprise (a) the Independent D&Os, solely with respect to their post-petition conduct; (b) the Creditors' Committee, its professionals and its members, solely in their capacity as such; (c) any retained professional of the Debtors whose retention was approved by the Court; and (d) the Debtors and each of the Debtors' estates, if applicable.
• The same parties excluded from the Plan releases — including Simon Barlava, Morris Barlava, Andrew Clarke, Bridgit Lombard, Christine Kaighn, Victoria Taylor and MAS Acquisition, LLC — shall not be exculpated under the Plan.

Injunction and Gatekeeper Provision

• All holders of claims shall be enjoined from commencing or continuing any judicial or administrative proceeding or employing any process against the Debtors, the estates, the Creditors' Committee, the Liquidating Trustee or the Oversight Committee and its members with the intent or effect of interfering with the consummation and implementation of the Plan and the transfers, payments and distributions to be made thereunder.
• All injunctions or stays provided for in the cases under sections 105 or 362, or otherwise, in existence on the confirmation date will remain in full force and effect until the effective date, except as otherwise provided in the Plan or to the extent necessary to enforce the terms of the Plan, the Confirmation Order or a separate Court order.
• All entities that have held, hold or may hold claims against or equity interests in the Debtors will be permanently enjoined from taking the following actions against the Debtors, their estates or any of their property on account of such claim or interest: (i) commencing or continuing any action or other proceeding; (ii) enforcing, attaching, collecting or recovering any judgment, award, decree or order; (iii) creating, perfecting or enforcing any encumbrance of any kind; (iv) asserting any right of setoff, counterclaim, exculpation or subrogation against the Debtors, the estates, the Creditors' Committee, the Liquidating Trustee, the Released Parties or the Oversight Committee and its members; and/or commencing or continuing any action inconsistent with the Plan, provided that such entities will not be precluded from exercising their rights pursuant to and consistent with the terms of the Plan, the Confirmation Order or the Liquidating Trust Agreement.
• Under a gatekeeper provision, no party may commence, continue, amend or otherwise pursue, join in or support any other party pursuing a Cause of Action of any kind against the Debtors, the Liquidating Trust, the Exculpated Parties or the Released Parties without first (1) requesting a determination from the Bankruptcy Court, after notice and a hearing, that the Cause of Action represents a colorable claim and is not a claim the Debtors released under the Plan, attaching the proposed complaint or petition, and (2) obtaining specific authorization from the Bankruptcy Court to bring it.
  • Any party that obtains such determination and authorization and subsequently wishes to amend the authorized complaint or petition to add Causes of Action not explicitly included must obtain authorization from the Bankruptcy Court before filing the amendment.
  • The Bankruptcy Court will have sole and exclusive jurisdiction to determine whether a Cause of Action is colorable and, only to the extent legally permissible, jurisdiction to adjudicate the underlying colorable Cause of Action, provided that nothing in the provision requires, precludes or prohibits an insurer from administering, handling, defending, settling and/or paying claims covered by any Insurance Policies.
• Pursuant to section 1141(d)(3), the Confirmation Order will not discharge any debts or claims against the Debtors.

Insurance

• Nothing in the Plan shall diminish or impair the enforceability of any Insurance Policies that may cover claims against the Debtors or any other person.
• Effective as of the effective date, the Debtors will be deemed to have assumed all D&O Liability Insurance Policies — collectively, all Insurance Policies, including any "tail policy," covering any liability of the Debtors' present or former officers, directors, shareholders, members, managers, employees, affiliates or insiders — pursuant to sections 105 and 365(a), with entry of the Confirmation Order constituting the Court's approval of such assumption.
• Confirmation will not discharge, release, impair or otherwise modify any obligations, including indemnity obligations, of the insurers under the assumed D&O Liability Insurance Policies; each such indemnity obligation will be deemed and treated as an assumed executory contract as to which no proof of claim, administrative claim or cure amount claim need be filed, provided that notice of such claim be delivered to (i) the Debtors or, after the effective date, the Liquidating Trustee and (ii) if different, any insured. All rights of the Debtors, any insured or the Liquidating Trust to dispute such indemnity obligations are expressly reserved.
• No distributions shall be made on account of an allowed claim payable under one of the Debtors' Insurance Policies until the holder has exhausted all remedies with respect to that policy. To the extent an insurer agrees to satisfy a claim in whole or in part, the applicable portion may be expunged without an objection being filed or further Court order. Payments to holders of claims covered by Insurance Policies shall be made in accordance with the terms of the applicable policy, and nothing in the Plan waives any cause of action the Debtors or the Liquidating Trust may hold against any insurer, or any rights or defenses, including coverage defenses, held by insurers.

Conditions Precedent

• Conditions to confirmation include entry of the Confirmation Order containing provisions that, among other things, (i) authorize the implementation of the Plan in accordance with its terms, (ii) approve in all respects the other settlements, transactions and agreements effected pursuant to the Plan and (iii) approve the Liquidating Trust Agreement.
• Conditions to the effective date include:
  • The Confirmation Order shall have become a final order
  • The Confirmation Order shall have authorized and approved the appointment of the Liquidating Trustee and the Oversight Committee
  • The Debtors shall have sufficient cash on hand to pay all allowed Administrative Expense Claims
  • The Debtors shall have funded the Professional Fee Reserve
  • The Confirmation Order shall have effectuated the transfer of all Liquidating Trust Assets to the Liquidating Trust
• Each condition precedent may be waived or modified without further Court approval, in whole or in part, but only with the consent of the Debtors and the Creditors' Committee.

Plan Supplement and Other Provisions

• The Plan Supplement — which will include the Liquidating Trust Agreement, the identity of the Liquidating Trustee, the composition of the Oversight Committee and the Liquidation Analysis — shall be filed no later than 10 days before the deadline to object to confirmation. All documents in the Plan Supplement are an integral part of the Plan and shall be deemed approved by the Confirmation Order.
• On the effective date, the Debtors shall provide the Liquidating Trustee with timely access to all of the Debtors' books and records in their possession as of the petition date and the effective date, including servers, electronic mail and other communications, computers and mobile devices, and shall instruct third parties, including Professionals, holding such records to permit access and not to dispose of or destroy them absent the Liquidating Trustee's written authorization or further Court order.
• To the maximum extent provided by section 1146(a), post-confirmation sales or transfers of assets under, in contemplation of or in connection with the Plan are exempt from recording, stamp, conveyance, transfer, mortgage and similar taxes and filing fees, and state and local officials shall forgo collection and accept the instruments for filing without payment.
• The Confirmation Order shall provide that the terms of the Plan and the Confirmation Order survive and remain effective after entry of any order converting the cases to chapter 7, and shall bind heirs, executors, administrators, successors and assigns, including any chapter 7 or chapter 11 trustee appointed for the Debtors. Except where federal law supplies the rule, New Jersey law governs construction and implementation of the Plan.
• From the confirmation date until entry of a final decree closing the cases, the Bankruptcy Court retains such jurisdiction as is legally permissible over, among other things, claim objections and classification disputes, professional fee applications, executory contract matters, adversary proceedings and Causes of Action, enforcement and interpretation of the Plan, the Confirmation Order and the Liquidating Trust Agreement, appointment and replacement of the Liquidating Trustee, modification of the Plan under section 1127, and disputes between Oversight Committee members or between the Oversight Committee and the Liquidating Trustee.

Voting and Confirmation

• The Court entered the Solicitation Procedures Order in July 2026, authorizing the Debtors to solicit acceptances of the Plan, and the Confirmation Hearing is scheduled to commence in August 2026 at 10 a.m. ET before the Hon. Mark E. Hall at the U.S. Bankruptcy Court for the District of New Jersey, 50 Walnut Street, 3rd Floor, Newark, N.J. 07102. The specific dates were left blank in the Plan as filed on July 28, 2026, as were the docket numbers for the Final Cash Collateral Order and the Settlement Order, neither of which had been entered. The Confirmation Hearing may be continued from time to time without further notice other than an announcement in open court or a notice filed with the Court.
• Only holders of claims in Class 4 (General Unsecured Claims), which is impaired and may receive or retain property under the Plan, are entitled to vote, and a ballot will be provided only to such holders.
  • Class 1, Class 2 and Class 3 are unimpaired and conclusively presumed to accept under section 1126(f); their votes shall not be solicited.
  • Class 5 and Class 6 are not entitled to receive or retain any property and are deemed to reject under section 1126(g); their votes shall not be solicited.
• Ballots must be submitted electronically at the Claims and Noticing Agent's case site, or original ballots physically received by the Claims and Noticing Agent by first-class mail, hand delivery or overnight mail, by the Voting Deadline, set for a date in August 2026 at 4 p.m. ET; ballots sent by facsimile or e-mail are not allowed and will not be counted, and a vote may not be changed once submitted.
• Objections to confirmation must be made in writing, comply with the Bankruptcy Code, Bankruptcy Rules and Local Rules, state the objecting party's name and address and the nature and amount of any claim asserted, state with particularity the legal and factual bases for the objection, and be filed with the Court and served on the Notice Parties — counsel to the Debtors, the U.S. Trustee, counsel to the Prepetition Secured Lenders (Greenberg Traurig, LLP) and counsel to the Creditors' Committee — by a separate August 2026 deadline, also at 4 p.m. ET. Unless timely filed and served, an objection may not be considered by the Court at the Confirmation Hearing.
• For the Plan to be accepted by an impaired class, a majority in number and at least two-thirds in dollar amount of the claims voting must vote to accept, and at least one impaired class of creditors, excluding the votes of insiders, must actually vote to accept.
• Because Class 5 and Class 6 are deemed to reject, the Debtors shall (a) seek confirmation by employing the "cramdown" procedures under section 1129(b) and/or (b) modify the Plan accordingly, and the Plan shall constitute a motion for such relief. The Debtors and the Creditors' Committee reserve the right to alter, amend, modify, revoke or withdraw the Plan or any Plan exhibit or schedule, including to satisfy the requirements of section 1129(b).

Plan Support

• The Debtors and the Creditors' Committee recommend that all holders of claims entitled to vote on the Plan vote to accept it, and urge holders to evidence their acceptance by duly completing and returning their ballots on or before the Voting Deadline.
• The Debtors and the Creditors' Committee believe the primary advantage of the Plan over a chapter 7 liquidation is that creditors will likely receive more under the Plan than in a chapter 7 case and receive their distributions earlier, and that the Plan will result in lower total administrative costs and higher recoveries than a chapter 7 liquidation of the Debtors' assets.
  • Accordingly, they believe the Plan satisfies the "best interests of creditors test" and is in the best interests of creditors. A liquidation analysis demonstrating the lower recovery available to creditors in a chapter 7 liquidation had not been filed with the Plan and will be submitted in a Plan Supplement.
  • They further believe the Plan enables Class 4 creditors to realize the greatest possible value under the circumstances and, as compared to any alternative plan of liquidation, has the greatest chance to be confirmed and consummated, such that confirmation and consummation of the Plan is preferable to all other alternatives.

Risk Factors

• The Debtors and the Creditors' Committee make no assurances that the requisite acceptances will be received, and may need to obtain acceptances to an alternative plan or otherwise liquidate under chapter 7. Even if the requisite acceptances are received, there is no assurance the Court — which may exercise substantial discretion as a court of equity — will confirm the Plan.
• There can be no assurance that any or all of the conditions precedent to confirmation and the effective date will be satisfied or waived.
• Projected distributions rest on good faith estimates of the total claims ultimately allowed and the assets available for distribution, and there is no assurance the estimated claim amounts are correct. If the total allowed claims in a class are higher than estimated, or the funds available lower — including as a result of the prosecution and liquidation of the Litigation Claims — percentage recoveries will be less than projected, and holders whose claims are subject to objection cannot rely on the estimates.
• Depending on any defenses or counterclaims asserted by counterparties involved with any Litigation Claims and the resolution of any appeals, the anticipated proceeds associated with the Litigation Claims and available to unsecured creditors may be impacted.
• Certain creditors may object to the limited substantive consolidation of the Debtors' estates, which may negatively impact creditor recoveries.
• Holders may challenge the classification of claims. If the Court finds a different classification is required, the Plan Proponents would seek to modify the Plan and to use acceptances already received for the class in which a holder is ultimately deemed to be a member; any such reclassification could adversely affect a class by changing its composition and the vote required for approval, and disputes over classification or equal treatment could delay confirmation and consummation or result in denial of confirmation.
• There can be no assurance that the releases, exculpation and injunction provisions will be granted; failure of the Court to grant such relief may result in a plan of liquidation that differs from the Plan or the Plan not being confirmed. Parties are urged to read these provisions carefully to understand how confirmation and consummation will affect any claim, interest, right or action with regard to the Debtors and certain third parties.
• The financial information in the Plan has not been audited and was derived from the Debtors' books and records available at the time of preparation; the Plan Proponents are unable to warrant or represent that it is without inaccuracies.
• The Plan shall bind all holders of claims against and interests in the Debtors to the fullest extent authorized or provided under the applicable provisions of the Bankruptcy Code and all other applicable law.

Events Leading to the Chapter 11 Filing

• A multitude of factors contributed to the Debtors' need to commence the chapter 11 cases, including internal factors that constrained liquidity, such as significant cash needs to support operations as the Debtors emerged from their prior restructuring, as well as macroeconomic factors disrupting the retail industry generally — shifts in the competitive landscape, a move toward online channels, supply chain issues, and increased costs of goods and services due to inflation.
• Operational challenges and the economic shutdown caused by COVID-19 required the Debtors to restructure under chapter 11 at the end of 2020 in the District of Delaware, closing approximately 200 unprofitable stores and restructuring go-forward leases.
  • The Debtors emerged from bankruptcy in July 2021, and the business quickly returned to profitability later that year, with revenue returning to 2016 levels by 2022 and average store sales expanding by 27% or more from 2019 to 2022.
• A data breach on Jan. 31, 2023, shut down the Debtors' systems and materially disrupted operations, negatively impacting sales and EBITDA due to inventory and pricing systems paralysis. Later in 2023 and 2024, the Debtors faced further challenges from a disruptive e-commerce upgrade.
  • The Debtors' non-core brands, Franki and Richer Poorer, either lost significant EBITDA or failed to build sufficient traction to make the investments worthwhile, and both brands are now dormant.
  • Between 2022 and 2024, the business faced additional challenges as the Debtors spent more on marketing and promotion efforts to drive sales.
• Non-debtor affiliate MAS Acquisition, LLC, a holding company with no operations, acquired the Debtors in September 2024, after which the Debtors began a plan to review inventory, refocus on the target customer and improve product assortment and merchandising.
  • The Debtors executed significant cost reductions, including in freight/logistics and labor, reduced discounts and realized positive same-store sales in 2025, with an increase in margins from 2024 to 2025.
  • The Debtors nonetheless experienced continued struggles with supply chain issues and access to merchandise despite an otherwise positive trajectory.
  • An anticipated additional capital infusion in January 2026 did not come to fruition, and by January 2026 two of the Debtors' major suppliers had ceased operations, with continuing supply chain issues causing a cascading decline in the business.