Francesca's Acquisition - Chapter 11 Plan Terms

Plan Terms

Overview

• The Debtors — Francesca's Acquisition, LLC, Francesca's Operations, Inc., Francesca's Administrative Management, Inc., and Francesca's IP Debtors, Inc. — 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 Debtors and the Creditors' Committee are the Plan proponents. The Committee, appointed by the U.S. Trustee on Feb. 23, 2026, is comprised of seven members, each of which holds general unsecured claims against the Debtors.
  • The Creditors' Committee retained Fox Rothschild LLP as attorneys [D.I. 372] and Emerald Capital Advisors as financial advisors [D.I. 375].
  • The Debtors retained Mandelbaum Barrett PC as general bankruptcy counsel [D.I. 233]; SierraConstellation Partners LLC to provide restructuring personnel and chief financial officer services [D.I. 234]; Hilco IP Services LLC to market and sell the Debtors' assets [D.I. 235]; and Stretto, Inc. as claims and noticing agent [D.I. 76].
• The Plan contemplates the orderly wind-down of the Debtors. By the time the Court conducts the confirmation hearing, the Debtors will have (a) closed the sale of their intellectual property assets pursuant to section 363 of the Bankruptcy Code, and (b) liquidated their inventory via court-approved Store Closing Sales.
• The Plan provides for the distribution of proceeds paid 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.
• 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.

Business Background and Events Leading to the Filing

• Prior to bankruptcy, the Debtors 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 site at francescas.com. 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 the Debtors' products consisted of apparel and jewelry, with the remainder gifts and accessories, and e-commerce accounted for approximately 13% of sales. After 2021, the Debtors shifted their product mix toward lower-margin but higher-volume products, including dresses and tops.
• Operational challenges and the COVID-19 shutdown required the Debtors to restructure under chapter 11 in the District of Delaware at the end of 2020 (Case No. 20-13076 (BLS)), closing approximately 200 unprofitable stores and restructuring go-forward leases. The Debtors emerged in July 2021, with revenue returning to 2016 levels by 2022 and average store sales expanding 27% or more from 2019 to 2022.
• A Jan. 31, 2023 data breach shut down the Debtors' systems and materially disrupted operations, negatively impacting sales and EBITDA through inventory and pricing systems paralysis, followed by a disruptive e-commerce upgrade in 2023 and 2024. The Debtors' non-core brands, Franki and Richer Poorer, are now dormant.
• After MAS Acquisition, LLC acquired the Debtors in September 2024, the Debtors executed significant cost reductions, reduced discounts and realized positive same-store sales in 2025 with improved margins, but continued to struggle with supply chain issues and merchandise access. An anticipated capital infusion in January 2026 did not materialize, and by January 2026 two of the Debtors' major suppliers had ceased operations, causing a cascading decline.

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 Debtors' outstanding prepetition funded-debt obligations consist of:
  • A revolving credit facility, with approximately $26.1 million outstanding on the petition date, 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 on the petition date.
• On Feb. 21, 2024, the Debtors, as borrowers, entered into a Revolving Credit Agreement — as amended by a First Amendment dated May 2, 2024 and a Waiver, Consent and Second Amendment dated Sept. 6, 2024 — 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.
  • Pursuant to the Prepetition Credit Agreement and the associated Revolving Note and Term Note, 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 under the Prepetition Loan Documents 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. Certain events of default had occurred and the parties entered into forbearance agreements from time to time, most recently on Feb. 4, 2026, when the Debtors and the Prepetition Secured Lenders, through the Prepetition Agents, entered into the Fifth Forbearance Agreement and a seventh amendment to the credit agreement.
• The Debtors' assets and liabilities are set forth in their schedules filed on March 9, 2026. Scheduled assets included approximately $25 million in inventory and finished goods, approximately $5.7 million in office fixtures and equipment, and $1.1 million in a federal net [operating loss — verify]. Scheduled liabilities included approximately $28.1 million in secured debt and approximately $62 million in general unsecured claims, in each case excluding a $1,091,465,288 intercompany receivable on the Debtors' books owing from Francesca's Operations, Inc. to Francesca's Administrative Management, Inc.
  • The deadline to file claims other than for governmental entities and administrative expense claims 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 is Aug. 20, 2026 — after the plan voting deadline but before the confirmation hearing.
  • 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 filed claims against their books and records and believe the majority of filed claims supersede the claims reflected in the schedules.

Sale of Intellectual Property Assets

• The Debtors entered these chapter 11 cases intending to sell their intellectual property assets and to seek bids from potential qualified going-concern buyers. The Debtors filed a bid procedures motion on Feb. 9, 2026 [D.I. 45], and the Court entered the Bid Procedures Order on Feb. 12, 2026 [D.I. 96], one week after the petition date.
  • The Bid Procedures Order set a bid deadline of March 5, 2026, an auction date, if an auction were held, of March 9, 2026, and a sale hearing on March 12, 2026, and authorized the Debtors to enter into a stalking horse agreement with the Stalking Horse Bidder, Stand Out for Good, Inc. Sale objections were due March 6, 2026.
• Hilco began marketing the Debtors' 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 cancelled the scheduled auction [D.I. 266], filing a Notice of Successful Bidder and Designation of Contracts on March 10, 2026 [D.I. 278].
• On March 12, 2026, following the sale hearing, the Court entered the IP Sale Order approving the sale of the Debtors' intellectual property assets to the Stalking Horse Bidder for a purchase price of $7 million [D.I. 295].
  • The order deemed the sale free and clear of all liens, claims, and encumbrances after finding notice of the sale and consideration sufficient, and the negotiations properly "arm's-length," procedurally fair, and 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.
  • Although the Debtors marketed and were open to accepting going-concern bids, no going-concern bidders emerged, and thus no leases or non-intellectual property-related contracts were assumed. The Debtors established a 14-day negative notice process for lease and contract rejection [D.I. 261] and, through three omnibus rejection orders [D.Is. 259, 292, 293] and orders entered on rejection notices filed under those procedures [D.Is. 349-351, 354, 359, 360], rejected all of their store and office leases and 69 of their unexpired executory contracts by April 2, 2026, significantly reducing administrative costs.

Store Closing Sales

• The Debtors spent the early part of these chapter 11 cases stabilizing operations and maximizing liquidity to ensure a solid position from which to implement their wind-down strategy, centered around continuing the Store Closing Sales that began prepetition and selling intellectual property assets.
  • The Debtors sought standard operational "first day" relief supporting the wind-down, including interim and final relief for payment of wages, taxes, insurance and utilities, maintenance of cash management systems, and maintenance of existing customer loyalty programs [D.Is. 6, 10, 15, 16, 20, 22]. Informal objections were resolved consensually, and the Court entered orders on all first day relief and professional retentions — except final cash collateral relief — by March 3, 2026, within 26 days of the petition date.
  • The Debtors filed a motion on the petition date [D.I. 3] to enable the estates to continue the Store Closing Sales and liquidate remaining inventory, and obtained interim relief on Feb. 11, 2026 [D.I. 87] to continue the chain-wide "going out of business" sales under a consulting agreement among Tiger, SB360 Capital Partners, LLC and GA Retail Solutions, LLC.
  • The Debtors managed the concerns of several constituencies in negotiations spanning several weeks to obtain the Final Store Closing Sale Order on March 26, 2026, 49 days after the petition date [D.I. 333]. Landlord groups, the Creditors' Committee and certain government entities raised informal and formal objections [D.Is. 210, 217, 219, 242, 250, 258].
• The Final Store Closing Sale Order resolved those concerns as follows:
  • Landlord concerns regarding signage and "going dark" provisions were addressed with language on signage requirements, preservation of shopping center operating requirements, and dispute resolution processes for any potential landlord compliance issues. Landlords also sought adequate assurances based on concerns that, despite any potential profitability of the Store Closing Sales, the Debtors would become administratively insolvent, which the Debtors addressed in the Stub Rent Stipulation.
  • The Creditors' Committee objected regarding transparency in the calculation and distribution of the Store Closing Sale Consulting Fees [D.I. 224]. The Debtors, the Creditors' Committee, and the Consultant negotiated provisions for periodic reporting, post-sale reconciliations, and a mechanism for the Creditors' Committee to object to the fees.
  • Government entity concerns related to potential clashes between the sale procedures and laws regulating advertising, consumer protection, public safety and tax revenue were addressed by setting forth procedures for government entities to raise compliance issues with the Debtors without interrupting the Store Closing 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 [D.I. 42] 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 Store Closing Sales to continue and to finance the chapter 11 cases.
  • Landlords and the Creditors' 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 [D.Is. 210, 217, 219, 242, 250, 258].
• 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 and final cash collateral relief, as well as stub rent issues. The Court entered the Stipulation and Agreed Order Regarding Stub Rent Reserve on March 18, 2026 [D.I. 330], which:
  • Established a $2,832,751.51 reserve carved out of the cash collateral budget to address stub rent.
  • 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 a final hearing on cash collateral relief several times, most recently until April 16, 2026 [D.I. 361], to allow the parties to continue negotiations based on a cash collateral budget proposed after the conclusion of the Store Closing Sales. The Final Cash Collateral Order was entered on July 30, 2026 [D.I. 526].
• Attorneys for various tax authorities in Texas objected to final cash collateral approval [D.I. 510], asserting senior liens for unpaid ad valorem taxes of about $154,000 for tax periods 2022-2025. The objection remained pending as of the filing of the Plan, 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 mediation on May 13, 2026 before the Hon. Vincent F. Papalia, U.S. bankruptcy judge, 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 Settlement Order entered July 29, 2026 [D.I. 522] and the Final Cash Collateral Order entered July 30, 2026 [D.I. 526].
• Salient terms of the Global Settlement include:
  • 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 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 but not limited to: (1) avoidance actions; (2) commercial tort claims as defined in Article 9 of the Uniform Commercial Code; (3) claims against present or former officers and directors of the Debtors, including direct or derivative claims against any 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) maintained by the Debtors; (4) the non-exclusive right to seek a determination by the bankruptcy court of any tax, fine or penalty relating to a tax, or any addition to a tax, under section 505 of the Bankruptcy Code; (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 all 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 shall receive the first $500,000 in net Shared Recoveries proceeds recovered, if any.
    • The estates will receive the next $500,000 in net Shared Recoveries proceeds recovered, if any.
    • The Prepetition Secured Lenders and the estates shall each share 50% in all further net Shared Recoveries proceeds recovered 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.
• The following parties shall not be released under the Global Settlement: Simon Barlava; Morris Barlava; Andrew Clarke; Bridgit Lombard; Christine Kaighn; Victoria Taylor; MAS Acquisition, LLC — the holding company that acquired the Debtors in September 2024 — or any other current or former director, officer, manager, member, employee, affiliate or insider of the Debtors other than TerraMar Capital, LLC and/or its principals and affiliates (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 D&O liability insurance policy, provided that any recoveries resulting therefrom shall be limited to the insurance policies, exclusive of any deductibles and costs of defense.
• Pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the classification, distributions, releases, and other benefits provided under the Plan, on the effective date the provisions of the Plan shall constitute a good-faith compromise and settlement of all claims, interests, causes of action, and other controversies released, settled, compromised, or otherwise resolved pursuant to the Plan.
  • The Plan implements the settlements reached before the effective date, including the Global Settlement.
  • Entry of the confirmation order shall constitute the Court's approval of such compromise and settlement, as well as a finding that the settlement is fair, equitable, reasonable, and in the best interests of the Debtors and their estates.
  • Subject to Article 7 of the Plan, all plan distributions made to holders of allowed claims in any class are intended to be and shall be final.

Liquidating Trust

• 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 in accordance with the Plan, the Global Settlement, the Settlement Order, and the Liquidating Trust Agreement.
  • 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 Liquidating Trust Beneficiaries are the holders of allowed general unsecured claims.
• The Liquidating Trustee shall be chosen by the Creditors' Committee and shall serve without a bond, 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 of the Debtors' attorney-client, work-product, accountant-client and any other evidentiary privileges relating to the assets.
  • The Liquidating Trustee's powers include determining whether to bring, settle, release or compromise causes of action, avoidance actions and litigation claims without the need for court approval, provided that all compromises for which the amount in controversy exceeds $250,000 must be approved by the Oversight Committee or the Court to the extent the Oversight Committee objects; objecting to claims against the Debtors; and compromising and settling claims by and against the Debtors and their estates without court approval, provided that any compromise where the proposed allowed amount of the claim exceeds $250,000 must be approved by the Oversight Committee, and where the Oversight Committee declines to approve a compromise the Liquidating Trustee recommends, the Liquidating Trustee may seek court approval over its objection.
  • In the event the Liquidating Trustee dies, is terminated, or resigns for any reason, the Oversight Committee shall designate a successor. If the Oversight Committee is unable to do so, the Court may appoint a successor from any candidate proposed by any party in interest.
  • The source of payment for the Liquidating Trustee and its professionals shall be the Liquidating Trust Proceeds and any additional recoveries by the estates after confirmation of the Plan.
• Pursuant to section 1123(a)(5) of the Bankruptcy Code, as soon as reasonably practicable following the effective date, the Liquidating Trustee shall sell or otherwise dispose of, and liquidate or otherwise convert to cash, any non-cash assets in such manner as the Liquidating Trustee determines is in the best interests of the estates and holders of allowed claims.
• Following the effective date and until the chapter 11 cases are closed, not less than once every 90 days, the Liquidating Trustee shall file all post-effective date reports required and shall pay from the Liquidating Trust Proceeds all post-effective date fees charged or assessed against the estates under 28 U.S.C. § 1930, together with applicable interest pursuant to 31 U.S.C. § 3717.

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, 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 and shall have the authority specified in the Plan and Liquidating Trust Agreement. Any actions taken by the Oversight Committee shall be 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 to be taken.
  • Except for reimbursement of reasonable, actual costs and expenses incurred in connection with their duties — payable by the Liquidating Trustee upon presentation of proper documentation without the need for court approval — members of the Oversight Committee shall serve without compensation. Where the Oversight Committee declines to approve a settlement proposed by the Liquidating Trustee and the Liquidating Trustee seeks court approval over that objection, the Oversight Committee may retain attorneys to prosecute its objection, the reasonable costs of which the Liquidating Trustee will pay in the same manner as the Liquidating Trustee's professionals.

Dissolution

• 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 chapter 11 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 any of the Debtors, the estates or the chapter 11 cases, provided that nothing in that provision shall be construed as a waiver or release of the Debtors' current and former directors, officers, shareholders, members, managers, employees, affiliates or insiders except as otherwise set forth in the Plan, and the Liquidating Trustee reserves all rights to pursue the causes of action.
• 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 chapter 11 cases, provided that the Creditors' Committee shall remain in existence for the purpose of reviewing and approving final fee applications of professionals.

Substantive Consolidation

• The Plan is premised upon the deemed substantive consolidation of the Debtors for the limited purposes of voting, determining which claims and interests have accepted the Plan, confirmation of the Plan, and the resultant treatment of claims and interests and distributions under the Plan. The Plan shall serve as, and be deemed to be, a motion for entry of an order approving such deemed substantive consolidation.
• On the effective date, (i) any obligation of a Debtor and any guarantee thereof by any other Debtor shall be deemed one obligation, and any such guarantee shall be eliminated; (ii) each claim scheduled, filed or to be filed against any Debtor shall be deemed filed only against a single consolidated Debtor — identified in Section 2.18 of the Plan as Francesca's Acquisition, LLC — and deemed a single claim against and a single obligation of that entity; and (iii) any joint or several liability of the Debtors shall be deemed one obligation of the Debtors. 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.
• The limited deemed substantive consolidation (i) shall not affect the rights of any holder of a secured claim with respect to the collateral securing such claim and (ii) shall not, and shall not be deemed to, prejudice the Litigation Claims, which shall survive entry of the confirmation order — subject to the releases set forth in Article 6 of the Plan — as if there had been no deemed substantive consolidation.
• The Debtors contend limited consolidation is merited because (i) the Debtors are interrelated and operated as a consolidated enterprise — through a centralized cash management system, policy and management decisions made from their corporate headquarters, common directors and officers, agreements to be jointly and severally liable for various obligations or to serve as guarantors for one another, and public presentation of the integrated nature of their operations on their website and in their corporate logo — and (ii) the benefits of consolidation for the limited plan purposes outweigh any harm to creditors, particularly given the size of the intercompany claims, and it is not reasonably possible or practicable to allocate the proceeds of Litigation Claims on a debtor-by-debtor basis. 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 only class to be affected by the limited consolidation contemplated by the Plan is Class 4 General Unsecured Claims, one of whose sources of recovery is the proceeds of Litigation Claims.

Treatment of Claims and Interests

• In accordance with Bankruptcy Code section 1123(a), Administrative Expense Claims, Priority Tax Claims, and Professional Fee Claims are not classified and are excluded from the classes set forth in Article 2 of the Plan.
  • All allowed Administrative Expense Claims, other than Professional Fee Claims and Ordinary Course Professional Claims, shall be paid by the Liquidating Trustee from the Liquidating Trust Proceeds, in cash, in such amounts as are incurred in the ordinary course of the liquidation of the Debtors, or in such amounts as may be allowed by the Court, (a) as soon as practicable following the later of the effective date or the date the Court enters a final order allowing such claim, (b) upon such other terms as may exist in accordance with the ordinary course of the Debtors' liquidation, or (c) as may be agreed between the holder and the Liquidating Trustee. Administrative Expense Claims are not impaired by the Plan.
  • The Debtors estimate unpaid Administrative Expense Claims total $200,000, not including Professional Fee Claims but including claims under section 503(b)(9) of the Bankruptcy Code.
  • Each holder of an allowed Priority Tax Claim shall receive, in full and final satisfaction, (a) cash equal to the allowed amount of such claim, paid from the Liquidating Trust Proceeds in accordance with section 1129(a)(9)(C) of the Bankruptcy Code, or (b) such other treatment as agreed in writing with the Liquidating Trustee. The Debtors' claims register reflects $1.2 million in priority tax claims, the validity of which the Debtors have not yet evaluated and which they believe will be subject to objection and reduction.
• Classified claims and interests are treated as follows:
  • Class 1 (Pre-Petition Agent Claims): Each holder shall receive distribution from assets of the Debtors' estates, and their claims shall be treated in accordance with the terms of the Final Cash Collateral Order, Settlement Order, and Global Settlement. Nothing therein shall prohibit holders from seeking recovery on account of their claims from non-estate assets. Class 1 is impaired and entitled to vote.
  • Class 2 (Other Secured Claims): Consists of all secured claims other than the Class 1 Pre-Petition Agent Claims. Each holder shall receive either (i) delivery of the collateral securing its allowed claim, (ii) the net proceeds, if any, of the sale of such collateral, or (iii) such other treatment as agreed between the holder and the Liquidating Trustee. Any deficiency claim arising on account of a lack of collateral or otherwise resulting from that treatment shall be treated as a Class 4 General Unsecured Claim. Class 2 is unimpaired and conclusively deemed to have accepted the Plan pursuant to Bankruptcy Code section 1126(f).
  • Class 3 (Priority Non-Tax Claims): Each holder shall receive (a) cash equal to the allowed amount of such claim in accordance with section 1129(a)(9)(B) of the Bankruptcy Code, or (b) such other treatment as agreed in writing with the Debtors or the Liquidating Trustee. Class 3 is unimpaired and conclusively deemed to have accepted the Plan.
  • Class 4 (General Unsecured Claims): Each holder shall receive its pro rata share of the remaining portion of the Liquidating Trust Proceeds, after satisfaction in full of senior claims. The pro rata share is 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 4 is impaired and entitled to vote.
  • Class 5 (Intercompany Claims): Holders shall receive no recovery under the Plan as a result of the deemed substantive consolidation of the Debtors' estates for purposes of voting and distribution. Class 5 is impaired and deemed to reject the Plan pursuant to Bankruptcy Code section 1126(g).
  • Class 6 (Interests): Interests shall be cancelled, and holders shall not receive or retain any property under the Plan on account of such interests. Class 6 is impaired and deemed to reject the Plan.
• 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 by the Court. Requests for payment of administrative expense claims arising after the May 28, 2026 Administrative Expense Claims Bar Date — other than professional fee claims and claims of governmental units under section 503(b)(1)(B), (C) or (D) — must be filed and served no later than 30 days after the effective date. As soon as practicable following the effective date, the Liquidating Trustee shall establish a Disputed Claims Reserve, funded from available cash in an amount equal to what holders of disputed claims would otherwise have been entitled to, and treated as a disputed ownership fund under Treasury Regulation section 1.468B-9.
• On the effective date, except as otherwise provided in the Plan, each executory contract and unexpired lease not previously rejected, assumed or assumed and assigned shall be deemed automatically rejected by the Debtors.
• 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.
• Unless otherwise specifically provided for in the financing orders, the Plan, or the confirmation order, or required by applicable bankruptcy and non-bankruptcy law, postpetition interest shall not accrue or be paid on any claim, and no holder of a claim shall be entitled to interest accruing on or after the petition date.

Distributions

• The Liquidating Trustee shall make distributions on account of allowed claims in accordance with Article 2 of the Plan and may engage a distribution agent. All distributions under the Plan are indefeasible and shall be made in U.S. dollars; claims asserted in foreign currencies are converted at prevailing exchange rates.
• No distribution of less than $100 shall be made. Such amounts are retained for the recipient's account until successive distributions aggregate $100, and if they never do, the funds revert to the estates for redistribution. If the cash available for a 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 the distribution date — including uncashed checks and mail returned as undeliverable — are cancelled, and the related claims are deemed forfeited and expunged without further court order, with the funds redistributed under the Plan.
• As a condition to payment, each creditor must provide valid tax information if the Liquidating Trustee requests it. A 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 receive, and the forfeited funds revert for disbursement under the Plan.
• Claims paid or satisfied by third parties are reduced or disallowed accordingly, and a holder whose total recovery exceeds its claim must repay the Liquidating Trust within 14 calendar days. No distribution is made on a claim payable under the Debtors' insurance policies until the holder has exhausted its remedies under the applicable policy.

Preservation of 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, (iii) prepetition commercial tort claims as defined in Article 9 of the Uniform Commercial Code, and (iv) claims against present or former officers and directors of the Debtors, including direct or derivative claims against any 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 (the "Litigation Claims").
• Except as otherwise provided in the Plan — including the release, exculpation, and injunction provisions in Article 6, the Global Settlement, and the Settlement Order — or in any contract, instrument, release or agreement entered into in connection with the Plan, all claims or causes of action that the Debtors or the estates may have against any person or entity are preserved, including any and all causes of action under sections 502, 510, 522(f), 522(h), 542, 543, 544, 545, 547, 548, 549, 550, 551, and 553 of the Bankruptcy Code.
• The Debtors have not completed their investigation into prepetition transactions, and 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.
• Effective as of the effective date, the Debtors will be deemed to have assumed all D&O Liability Insurance Policies pursuant to sections 105 and 365(a) of the Bankruptcy Code. 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.
• 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

• The Plan proposes for the Debtors to release the Released Parties as set forth in Section 6.4 and to exculpate the Exculpated Parties as set forth in Section 6.5.
• 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, liability, action, proceeding, account, controversy, agreement, promise, right to legal or equitable remedies, or right to payment, whether known or unknown, 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 or events 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 Combined Disclosure Statement and Plan, and the administration, formulation, preparation, dissemination, solicitation, negotiation, consummation, and implementation of any of the foregoing, taking place on or prior to the effective date.
• The "Released Parties" are (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 parties released under the Global Settlement.
• The following parties shall not be released under the Plan: 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 and/or its principals and affiliates, 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 D&O liability insurance policy, provided that any recoveries resulting therefrom shall be limited to the insurance policies, exclusive of any deductibles and costs of defense.
• The Debtors believe the proposed releases satisfy applicable standards because they are a valid exercise of the Debtors' business judgment and are fair, reasonable and in the best interests of the Debtors' estates, noting that section 1123(b)(3)(A) of the Bankruptcy Code 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 the proposed recoveries would not be possible without the Released Parties' efforts.
• Except as expressly provided otherwise in the Plan, the Final Cash Collateral Order, the Settlement Order, or the Global Settlement, unless a holder of a secured claim receives a return of its collateral under the Plan, each holder of (a) an allowed secured claim and (b) an allowed claim that is purportedly secured shall, on the effective date, turn over and release to the Debtors any and all property that secures or purportedly secures such claim and execute such documents and instruments as the Debtors require to evidence the release of such property; all claims, rights, title and interest in such property shall revert to the Debtors free and clear of all claims against the Debtors, including liens, charges, pledges, encumbrances and/or security interests of any kind. No distribution shall be made to or on behalf of such a 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 need not 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 the Debtors.
• The releases run only from the Debtors and their estates; the Plan does not purport to impose non-consensual third-party releases, and holders of claims are not barred from pursuing recovery against non-Debtors — subject, however, to the gatekeeper provision described below, which conditions suits against the Debtors, the Liquidating Trust, the Released Parties and the Exculpated Parties on prior court authorization.

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, or 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 Combined Disclosure Statement and Plan, solicitation of acceptances, the pursuit of confirmation, confirmation, consummation, or the administration of the Plan or the property to be distributed under the Plan.
  • The exculpation excepts 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 such parties shall in all respects be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities.
  • Nothing in the exculpation shall exculpate acts or omissions prior to the petition date or post-effective date.
• The "Exculpated Parties" are (a) the Independent D&Os, solely with respect to their postpetition 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 releases — 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 and/or its principals and affiliates — shall not be exculpated under the Plan, on the same terms described above.

Injunction and Gatekeeper Provision

• All injunctions or stays provided for in the chapter 11 cases under section 105 or 362 of the Bankruptcy Code, or otherwise, and 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 and conditions of the Plan, the confirmation order, or a separate order of the Court.
• All entities who have held, hold or may hold claims against or equity interests in the Debtors will be permanently enjoined from taking any of the following actions against the Debtors, their estate, or any of their property on account of any such claim or equity interest: (i) commencing or continuing, in any manner or place, any action or other proceeding; (ii) the enforcement, attachment, collection or recovery by any manner or means of any judgment, award, decree or order; (iii) the creation, perfection or enforcement of any encumbrance of any kind; (iv) the assertion of any right of setoff, counterclaim, exculpation, or subrogation of any kind, in each case against the Debtors, the estates, the Creditors' Committee, the Liquidating Trustee, the Released Parties, or the Oversight Committee and its members, to the fullest extent authorized or provided by the Bankruptcy Code; and/or commencing or continuing any action that does not comply with or is inconsistent with the provisions of the Plan.
  • 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 the 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 Court, after notice and a hearing, that such cause of action represents a colorable claim and is not a claim the Debtors released under the Plan — which request must attach the proposed complaint or petition — and (2) obtaining specific authorization from the Court to bring such cause of action. A 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 further authorization from the Court before filing the amendment.
  • The Court will have sole and exclusive jurisdiction to determine whether a cause of action is colorable and, only to the extent legally permissible, will have 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 in accordance with and subject to the terms and conditions of such policies and/or applicable non-bankruptcy law.
• Pursuant to section 1141(d)(3) of the Bankruptcy Code, the confirmation order will not discharge any debts or claims against the Debtors.

Conditions Precedent

• Article 5 of the Plan sets out certain conditions that must be satisfied, or waived, prior to confirmation of the Plan and certain other conditions that must be satisfied, or waived, prior to the effective date. Each condition may be waived, in whole or in part, by the Debtors and the Creditors' Committee.
• Conditions to confirmation include entry of a confirmation order that, among other things, (i) authorizes the implementation of the Plan in accordance with its terms, (ii) approves the other settlements, transactions and agreements to be effected pursuant to the Plan, (iii) finds that the Plan complies with all applicable provisions of the Bankruptcy Code, including that the Plan was proposed in good faith and that the confirmation order was not procured by fraud, and (iv) approves 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 have funded the Professional Fee Reserve.
  • The confirmation order shall have effectuated the transfer of all Liquidating Trust Assets to the Liquidating Trust.

Professional Fees

• All final requests for payment of Professional Fee Claims may be made any time after the confirmation date but shall be filed no later than the Professional Fee Claims Bar Date. Objections must 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 final fee application is filed.
• The Debtors estimate unpaid Professional Fee Claims as of June 30, 2026, together with estimated, budgeted fees and expenses for July and August 2026, as follows:
  • Mandelbaum Barrett PC, counsel to the Debtors: $822,412 unpaid, $200,000 estimated accrued, for a total of $1,022,412.
  • SierraConstellation Partners, LLC, financial advisor to the Debtors: $450,265 unpaid, $80,000 estimated accrued, for a total of $530,265.
  • Hilco IP Services, LLC, intangible asset disposition consultant: $850,000 total.
  • Fox Rothschild LLP, counsel to the Creditors' Committee: $717,172 unpaid, $60,000 estimated accrued, for a total of $777,172.
  • Emerald Capital Advisors, financial advisor to the Creditors' Committee: $324,263 unpaid, $30,000 estimated accrued, for a total of $354,263.
• The estimates total approximately $3.53 million. Allowed Professional Fee Claims are to be paid from the Professional Fee Reserve, which the Debtors must fund as a condition to the effective date, and are not impaired by the Plan. Separately, the Global Settlement's Carve Out funds $715,000 on account of accrued and unpaid professional and claims agent fees as set forth in the budget attached to the Final Cash Collateral Order.
• The Debtors do not believe there are any unpaid Ordinary Course Professional Claims.
• No attorneys' fees with respect to any claim shall be payable under the Plan, except as expressly specified in the Plan or allowed by a final order of the Court.

Best Interests, Feasibility and Risk Factors

• The Debtors and the Creditors' Committee contend the Plan satisfies the best interests test because creditors will likely receive more under the Plan, and receive distributions earlier, than in a chapter 7 case. Conversion would disrupt an orderly plan process expected to produce a prompt initial distribution to holders of allowed Class 4 claims and would add the administrative costs of a chapter 7 trustee, its separate professionals, and time-consuming investigations and discovery.
• A liquidation analysis demonstrating lower recoveries in a chapter 7 liquidation has not been filed with the Plan and will be submitted in the Plan Supplement.
• Because the Plan contemplates distribution of the proceeds of the sale and the Store Closing Sales followed by wind-down of the remaining estates, the proponents contend all plan obligations will be satisfied without further reorganization and that the feasibility requirement of section 1129(a)(11) is met.
• Identified risks include that the requisite acceptances may not be received or the Plan may not be confirmed; that actual distributions may fall below estimates if allowed claims exceed projections or available funds fall short; that the disposition of the Litigation Claims — including any defenses, counterclaims or appeals — may reduce proceeds available to unsecured creditors; that creditors may object to the deemed substantive consolidation, which may negatively impact recoveries; that claim classification may be challenged, potentially requiring modification or resolicitation; and that the releases, exculpation and injunction provisions may not be approved, which could result in a different plan of liquidation or in the Plan not being confirmed.
• The Plan Supplement — which will include the Liquidating Trust Agreement, the identity of the Liquidating Trustee, and the liquidation analysis — is to be filed no later than 10 days before the deadline to object to confirmation.

Voting and Confirmation

• On Aug. 4, 2026, the Court entered the Solicitation Procedures Order, authorizing the Debtors to solicit acceptances of the Plan.
• The Confirmation Hearing is scheduled to commence on Sept. 8, 2026 at 11:00 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.
  • Objections to confirmation must be in writing, state the objector's name and address, the nature and amount of any claim or interest asserted, and the legal and factual bases of the objection with particularity, and be filed with the Court and served on the notice parties — Debtors' counsel Mandelbaum Barrett PC; the Office of the U.S. Trustee (Jeffrey Sponder); counsel to the Prepetition Secured Lenders, Greenberg Traurig LLP; and Committee counsel Fox Rothschild LLP — so as to be received on or before Sept. 1, 2026 at 4:00 p.m. ET. Unless timely filed and served, an objection may not be considered by the Court at the Confirmation Hearing.
  • Ballots must be submitted electronically at cases.stretto.com/FrancescasAcquisition, or original ballots physically received by the claims and noticing agent, Stretto, by first class mail, hand delivery or overnight mail, on or before the voting deadline of August [ ], 2026 at 4:00 p.m. ET — the date is left blank in the filed Plan. Ballots sent by facsimile or e-mail are not allowed and will not be counted, and a vote may not be changed once the ballot is submitted or received.
• Class 1 (Pre-Petition Agent Claims) and Class 4 (General Unsecured Claims) — the Voting Classes — are the only classes that are both impaired and may receive or retain property under the Plan, and their holders are therefore entitled to vote and will be solicited.
  • Class 2 (Other Secured Claims) and Class 3 (Priority Non-Tax Claims) are unimpaired and conclusively presumed to accept the Plan.
  • Holders of claims and interests in Class 5 (Intercompany Claims) and Class 6 (Interests) are not entitled to receive or retain any property under the Plan and are deemed to reject the Plan under section 1126(g); their votes will not be solicited.
  • For the Plan to be accepted by an impaired class of claims, a majority in number (i.e., more than half) and at least two-thirds in dollar amount of the claims voting must vote to accept. At least one impaired class of creditors, excluding the votes of insiders, must actually vote to accept the Plan.
• Because Class 5 and Class 6 are deemed to reject, the Debtors shall (a) seek confirmation by employing the "cramdown" procedures set forth in Bankruptcy Code section 1129(b) and/or (b) modify the Plan in accordance with Section 8.2.
  • 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), if necessary. The Plan may be withdrawn or modified by the Debtors and the Creditors' Committee at any time prior to the confirmation date.
• The Debtors and the Creditors' Committee recommend that all holders of claims entitled to vote on the Plan vote to accept it, stating that they believe confirmation and consummation of the Plan is preferable to all other alternatives, and urging holders to evidence their acceptance by duly completing and returning their ballots so that they will be received on or before the voting deadline.