Item 1.03 Bankruptcy or Receivership.
As previously reported, on December 3, 2020, FHC Holdings Corporation (f/k/a
Francesca's Holding Corporation) (the "Company") and each of its subsidiaries
(together with the Company, the "Debtors") commenced voluntary cases (the
"Chapter 11 Cases") for relief under chapter 11 of title 11 of the United States
Code, §§ 101-1532, et seq. in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). The Chapter 11 Cases are being
jointly administered under the caption In re FHC Holdings Corporation, et al.,
Case No. 20-13076 (BLS).
On January 30, 2021, the Debtors completed the sale of substantially all of
their assets to Francesca's Acquisition, LLC, an affiliate of TerraMar Capital
LLC, and Tiger Capital Group, LLC.
Confirmation of Plan
On May 25, 2021, the Debtors filed with the Bankruptcy Court the Debtors' First
Amended Combined Disclosure Statement and Chapter 11 Plan of Liquidation (as it
may be amended, supplemented, or otherwise modified, the "Plan"). On July 20,
2021, following the hearing to consider confirmation of the Plan, the Bankruptcy
Court entered the Findings of Fact, Conclusions of Law, and Order Confirming
Debtors' First Amended Combined Disclosure Statement and Chapter 11 Plan of
Liquidation (as it may be amended, supplemented, or otherwise modified the
"Confirmation Order"), which confirmed the Plan. Copies of the Plan and
Confirmation Order are filed as Exhibits 2.1 and 99.1, respectively, to this
Current Report on Form 8-K, and are incorporated by reference into this Item
1.03. Capitalized terms used in this Current Report on Form 8-K and not
otherwise defined will have the meanings given to them in the Confirmation Order
or Plan, as applicable.
Summary of Plan
The Plan constitutes a liquidating chapter 11 plan for the Debtors that seeks to
distribute the net proceeds from the sale of the Debtors' business, provide for
the termination of the Debtors' remaining business operations, liquidate the
Debtors' remaining assets, and wind down the Debtors' affairs in an orderly
process. Upon the conclusion of distributions under the Plan, the Plan
Administrator will wind down the Debtors' Estates, seek approval to close the
Chapter 11 Cases, and dissolve the Debtors under applicable law.
The Plan provides that on the Effective Date of the Plan, Anthony M. Saccullo,
the Debtors' Wind-Down Officer, will be appointed as the initial Plan
Administrator and serve in accordance with the Plan. On the Effective Date, the
Plan Administrator shall be deemed the sole manager, officer, and representative
of the Fran Liquidation Estates to exercise the rights, power, and authority of
the Fran Liquidation Estates under applicable provisions of the Plan and
bankruptcy and non-bankruptcy law. The Plan Administrator shall act for the Fran
Liquidation Estates in a fiduciary capacity implementing the liquidation and
wind-down of the Fran Liquidation Estates subject to the provisions of the Plan.
Among other things, the Plan Administrator is empowered to: (i) collect and
liquidate the Estate Assets; (ii) assert and enforce all legal or equitable
remedies and defenses belonging to the Debtors or their Estates; (iii) take such
actions the Plan Administrator deems appropriate in its reasonable business
judgment against any Person with respect to a Claim or Estate Cause of Action;
(iv) make distributions to Holders of all Allowed Claims, including Allowed
Claims for Professional Fees, in accordance with the Plan; (v) employ
professionals to assist it in carrying out its duties; (vi) pursue recoveries
for the Holders of General Unsecured Claims; (vii) prepare financial statements
and post-confirmation quarterly reports; (viii) effect all actions and execute
all agreements, instruments, and other documents, and take all actions,
necessary to consummate the Plan and wind down the Debtors' businesses; (ix) pay
all other expenses for winding down the affairs of the Debtors; (x) implement
and/or enforce all provisions of the Plan; (xi) perform all other duties
required by the Bankruptcy Code; and (xii) exercise such other powers as may be
vested in the Plan Administrator by order of the Bankruptcy Court, pursuant to
the Plan, or as deemed by the Plan Administrator to be necessary and proper to
implement the provisions of the Plan.
The Plan creates four classes of Claims against, and Equity Interests in, the
Debtors. Holders of Allowed Claims in Class 1 (Priority Non-Tax Claims) and
Class 2 (Secured Claims) shall be paid in full in cash in accordance with the
terms of the Plan. Holders of Allowed Claims in Class 3 (General Unsecured
Claims) may receive distributions under the Plan to the extent of available
Estate Assets. Holders of Equity Interests in Class 4 will not receive any
distributions or receive or retain any property under the Plan on account of
such Equity Interests. In addition, Holders of Allowed Administrative Claims and
Allowed Priority Tax Claims shall also be paid in full in cash in accordance
with the terms of the Plan. The Plan Administrator will make all distributions
under the Plan to the appropriate Holders of Allowed Claims in accordance with
the terms of the Plan.
The Plan will become effective on the Business Day of, on, or promptly following
the satisfaction or waiver of the following conditions: (i) the Confirmation
Order shall have become a Final Order in full force and effect and shall not
subject to any stay of effectiveness; (ii) the Confirmation Date shall have
occurred and no request for revocation of the Confirmation Order under section
1144 of the Bankruptcy Code shall have been made, or, if made, shall remain
pending; (iii) the Plan Administrator shall be duly appointed, qualified, and
acting in that capacity; (iv) all Statutory Fees incurred for periods arising
prior to the Effective Date shall be paid by the Debtors or placed in a reserve
for such purpose; (v) all documents to be executed, delivered, assumed, or
performed upon or in connection with consummation of the Plan shall have been
executed, delivered, assumed, or performed, as the case may be, and any
conditions contained therein shall have been satisfied or waived in accordance
therewith, including all documents included in the Plan Supplement; (vi) all
other actions, documents, certificates, and agreements necessary to implement
the Plan shall have been effected or executed and delivered, as the case may be,
to the appropriate parties and, to the extent required, filed with the
applicable Governmental Units in accordance with applicable law; and (vii) there
shall not be in effect any (a) order, opinion, ruling, or other decision entered
by any court or other Governmental Unit or (b) U.S. or other applicable law
staying, restraining, enjoining, prohibiting, or otherwise making illegal the
implementation of any of the transactions contemplated by the Plan. The
Effective Date is anticipated to occur on July 30, 2021. Once effective, Article
XIII of the Plan contains certain release, exculpation, and injunction
provisions that may affect the rights of Holders of Claims and Equity Interests.
The foregoing description is a summary of the material terms of the Plan, does
not purport to be complete, and is qualified in its entirety by reference to the
full text of the Plan filed as Exhibit 2.1 to this Current Report on Form 8-K,
which is incorporated by reference herein.
Cautionary Note to Holders of the Company's Common Stock
As of December 3, 2020, the Company had 3,030,305 shares of common stock issued
and outstanding. On May 10, 2021, Nasdaq delisted the Company's common stock.
The Plan, as approved by the Bankruptcy Court, provides that the Holders of
Equity Interests in the Debtors, including, without limitation, common stock of
the Company, will not receive any distribution on account of their Equity
Interests and that such common stock will be cancelled on the Effective Date.
Assets and Liabilities
As of July 3, 2021 the Company had total assets of approximately $51,626,469 and
total liabilities of approximately $79,086,031, as disclosed in the Company's
most recent monthly operating report filed with the Bankruptcy Court on July 21,
2021 and filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed
with the Securities and Exchange Commission on July 23, 2021.
Cautionary Statement Regarding Forward-Looking Information
Certain statements in this Current Report on Form 8-K are "forward-looking
statements" made pursuant to the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995, as amended. Such forward-looking
statements reflect the Company's current expectations or beliefs concerning
future events and are subject to various risks and uncertainties that may cause
actual results to differ materially from those that are expected. These risks
and uncertainties include, but are not limited to, the following: risks
attendant to the bankruptcy process, including the Company's ability to realize
proceeds from remaining assets and distribute such proceeds in accordance with
the confirmed Plan; the Company's ability to obtain court approval of motions or
requests made to the Bankruptcy Court throughout the course of the Chapter 11
Cases; the effects of the Chapter 11 Cases, including increased legal and other
professional costs incurred in connection with the administration of the Chapter
11 Cases and the Company's confirmed Plan on the Company's liquidity; the length
of time that the Company will operate under chapter 11 protection; risks
associated with third-party motions in the Chapter 11 Cases; Bankruptcy Court
rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in
general; and risks related to the trading of the Company's common stock on the
OTC Pink Market and impacts from the delisting of the Company's common stock
from the Nasdaq Stock Market LLC. For additional information regarding these and
other risks and uncertainties that could cause actual results to differ
materially from those contained in the Company's forward-looking statements,
please refer to "Risk Factors" in the Company's Annual Report on Form 10-K for
the year ended February 2, 2020 filed with the SEC on May 1, 2020. The Company
undertakes no obligation to publicly update or revise any forward-looking
statement.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
2.1 Debtor's First Amended Combined Disclosure Statement and Chapter
11 Plan of Liquidation
99.1 Findings of Fact, Conclusions of Law, and Order Confirming
Debtor's First Amended Combined Disclosure Statement and Chapter 11
Plan of Liquidation
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