Clothing chain Francesca’s files bankruptcy to sell itself

Clothing and accessories chain Francesca’s Holdings Corp. filed for bankruptcy protection to ease a planned sale of assets to an investor as retailers face continued financial pressure during the coronavirus pandemic.

Francesca’s sought chapter 11 in the U.S. Bankruptcy Court in Wilmington, Del., on Thursday to run a sales process while tapping TerraMar Capital LLC, which invests in midsize businesses, as the lead bidder. TerraMar’s offer will be subject to higher bids and an auction if necessary, and requires court approval to close.

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Francesca’s CEO Andrew Clarke said a number of other interested parties are engaged in due diligence.

Francesca’s storefront (Google Street View) 

“We are confident that we will emerge from this process as a stronger company poised to drive growth by exploring new brand avenues, expanding our e-commerce channels, and providing our customers with the latest fashion options and treasure-hunt experiences they know and love us for, ” he said.

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Houston-based Francesca’s said in November that it would close roughly 140 of its boutiques–which sell apparel, jewelry, accessories and gifts–by the end of January, leaving about 560 in operation. The company said Thursday it planned to renegotiate a number of leases during the bankruptcy process, which “may include closing additional boutiques.”

Francesca’s lender Tiger Finance LLC is supplying a $25 million financing package to carry the company through chapter 11 and cover employee wages and benefits and the provision of customer orders. The company’s planned sales process would conclude by Jan 20.

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The coronavirus has been devastating for many retailers as government mandates and shoppers’ fear of contagion have reduced foot traffic at bricks-and-mortar locations. The pandemic exacerbated the challenges retailers already faced from changing consumer habits and the growing popularity of online shopping.

Retailers shut down stores for good at a record pace in the first half of 2020, while big companies like J.C. Penney Co., Neiman Marcus Group Inc. and Brooks Brothers Inc. filed for chapter 11.

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Amazon rival Wish files to go public amid online shopping boom

Despite being promoted by footballers Gareth Bale and Paul Pogba, the company has courted controversy in the past. It came under fire for selling banned knives and tasers to UK shoppers in 2018.  Facebook adverts showing fake tongues, sex toys and “cat masks” on the site caused a stir in 2017.

Wish said it is focusing on selling to households with lower incomes in the Middle East, Africa. South America, Eastern Europe, markets which retail rival Amazon has left largely untouched. 

Investors include Peter Thiel’s Founders Fund along with DST Global, Formation8, GGV Capital and Republic Technologies.  Mr Szulczewski controls 65.5pc of the company’s Class B shares, giving him around 58pc of its total voting power. 

The filing, published on Friday, highlighted potential challenges to the company including merchant fraud and opposition from the Chinese government. 

Merchants have previously conspired to create fake sales to appear more trustworthy on its website and bump up their items when customers search, it said. Wish warned that it may not be able to crack down on this in its entirety, potentially prompting governments to intervene. 

It added that it was subject to the rules of China which has stringent internet regulations – which it noted could become even more tricky to operate in. The Chinese government could shut down operations and take control of Wish’s income if they felt they had broken the rules, some of which are not made clear until it is too late. 

“The People’s Republic of China’s system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect,” the filing stated.  

“As a result we may not be aware of our violation until sometime after.”

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PREIT, owner of Fashion District Philadelphia, files for bankruptcy in restructuring plan

The owner of Fashion District Philadelphia and several other malls throughout the region has filed for bankruptcy as part of a move to restructure its business.

PREIT, short for Pennsylvania Real Estate Investment Trust, had indicated in October that its properties were struggling because of the COVID-19 pandemic. The company made a restructuring proposal to its lenders, hoping to avoid filing for bankruptcy, but ultimately did so after receiving 95% backing for its plan.

The bankruptcy filing announced Sunday ensures that PREIT’s properties can continue to operate without disruption as it finalizes the restructuring.

“We are pleased to be moving forward with strengthening the Company’s balance sheet and positioning it for long-term success through our prepackaged plan. We are grateful for the significant support we have received from a substantial majority of our lenders, which we expect will enable us to complete our financial restructuring on an expedited basis,” said Joseph F. Coradino, CEO of PREIT. “Today’s announcement has no impact on our operations – our employees, tenants, vendors and the communities we serve – and we remain committed to continuing to deliver top-tier experiences and improving our portfolio.”

PREIT owns 21 properties in nine states and has sold off several malls in recent years, including the Phillipsburg Mall in New Jersey and the Palmer Park Mall in Easton, Pennsylvania.

Among the properties PREIT owns in the Philadelphia region are the Cherry Hill Mall and Moorestown Mall in South Jersey and the Willow Grove Park Mall, Plymouth Meeting Mall and the Fashion District, the multiyear renovation of Philadelphia’s former Gallery at Market East that held its grand opening in September 2019.

PREIT reported a net loss of $29 million in the second quarter of this year, following coronavirus shutdowns and decreased shopping among consumers after malls reopened. In September, the company received a stock delisting notice from the New York Stock Exchange after its share price fell below the $1 threshold.

Under the bankruptcy filing, PREIT will list some of its properties as collateral for debt and for the $150 million in new lending it has received.

“With the overwhelming support of our lenders, we look forward to quickly emerging from this process as a financially stronger company with the resources and support to continue creating diverse, multi-use ecosystems throughout our portfolio,” Coradino said.

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CBL, shopping mall giant, files for bankruptcy

CBL Properties, which counts big retailers including JC Penney and Dick’s Sporting Goods as tenants, has filed Chapter 11 bankruptcy protection, according to a company filing despite making an effort in August with its creditors to stave off bankruptcy.

Ticker Security Last Change Change %
CBL CBL & ASSOCIATES PROP 0.15 -0.00 -1.95%

The Chattanooga, Tenn.-based company filed in the Southern District Court of Texas to allow it to keep operating while it attempts to fix its finances. This comes in large part because of a weakened U.S. economy and consumers increasingly turning to online shopping due to the coronavirus pandemic.

Shares of CBL have been under pressure since the start of the year and have lost nearly 95% of their value, as bankruptcy edged closer for the shopping mall operator.

In the filing, CBL said it estimated its assets between $1 billion and $10 billion, with its estimated liabilities around the same levels.

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Bloomberg was the first to report news of the Chapter 11 filing.

In mid-August, CBL said it entered into a “comprehensive restructuring” that allowed it to get rid of $900 million worth of debt and at least $600 million in additional expenses, according to a company filing.

CBL is one of the largest landlords in the country, owning 108 commercial properties, totaling 68.2 million square feet in 26 states, according to its website. One of its largest renters, J.C. Penney, has already filed for bankruptcy, amid a cash crunch.

In mid-October, J.C. Penney CEO Jill Soltau said the company moved one step closer to exiting the Chapter 11 bankruptcy process ahead of the holiday season.

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The announcement comes as coronavirus-linked bankruptcies rise for corporations. According to data compiled by legal service firm Epiq, 5,529 U.S. businesses — including 747 in September — have sought relief in bankruptcy courts this year, up 33% over 2019 levels.

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Fox Business Lucas Manfredi and Daniella Genovese contributed to this story.

US commercial bankruptcies up 33% amid coronavirus pandemic

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CBL, Shopping Mall Operator, Files for Bankruptcy Protection

Shopping mall operator CBL & Associates Properties  (CBL) – Get Report filed for Chapter 11 bankruptcy protection, becoming the latest mall operator seeking to restructure its operations as the Covid-19 pandemic slams the brick-and-mortar retail sector.

CBL filed for bankruptcy protection with the U.S. bankruptcy court for the Southern District of Texas on Sunday. The Chattanooga, Tenn.-based real estate investment trust listed both estimated assets and liabilities in the range $1 billion to $10 billion.

CBL had announced in August that it had entered into a restructuring agreement with a group of its bondholders to allow it to regroup on its debts and beef up its balance sheet amid the pandemic, which shuttered malls outright for much of the spring and has continued to keep shoppers wary of physically entering closed spaces to shop.

However, CBL and other mall operators have continued to struggle as retailers that prior to the pandemic relied on shoppers flocking to malls to buy clothing, accessories and other goods have themselves shuttered their doors. 

J.C. Penney, one of CBL’s biggest renters, earlier this year filed for Chapter 11 protection. Other well-known brands that have stores in CBL malls include Victoria’s Secret and Bath & Body Works, both owned by L Brands  (LB) – Get Report, as well as Signet Jewelers  (SIG) – Get Report and Foot Locker  (FL) – Get Report.

CBL is structured as a real estate investment trust that invests in shopping centers, primarily in the southeastern and midwestern U.S. Shares of CBL were trading at 12 cents in premarket trading on Monday. The stock has fallen 55% since late March.

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Clothing retailer Le Chateau files for CCAA protection, plans to close its doors

MONTREAL – After 60 years in operation, Le Chateau Inc. is seeking court protection from creditors to allow it to liquidate its assets and close its stores.

The Montreal-based company said Friday that it has spent much of the COVID-19 pandemic trying to refinance or sell the business to a third party that would keep it in operation, but was unsuccessful.

“Its already evident impact on consumer demand for Le Chateau’s holiday party and occasion wear, which represents the core of our offering, has diminished Le Chateau’s ability to pursue its activities,” the company said.

“Regrettably, these circumstances leave the company with no option other than to commence the liquidation process.”

The company’s application for protection from creditors under the Companies’ Creditors Arrangement Act (CCAA) will be heard by a Quebec court on Friday.

Le Chateau said it intends to remain fully operational as it liquidates its 123 stores, but the eventual closures will mean the end of about 1,400 jobs — 500 at its head office and 900 at stores.

“We regret the impact this will have on our people and can assure you that we explored all options available to us prior to taking this difficult decision,” the company said.

Le Chateau expects Gordon Brothers Canada ULC and Merchant Retail Solutions ULC to be appointed as consultants to implement the liquidation and PricewaterhouseCooper Inc. to become its monitor in CCAA proceedings.

If Le Chateau’s CCAA application is granted, the company will obtain interim financing from Wells Fargo Capital Finance Corp. Canada to help it fund post-filing working capital requirements.

The company’s application comes after several other Canadian retailers have shuttered or downsized operations in the wake of the pandemic.

Reitmans Canada Ltd., Aldo Group Inc., DavidsTea Inc., Mountain Equipment Co-operative, Moores the Suit People Corp. and Laura’s Shoppe Inc. are among the dozens of retailers that have all filed for CCAA.

This report by The Canadian Press was first published Oct. 23, 2020.

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