Case 20-13076-BLS Doc 135 Filed 12/14/20 Page 1 of 18 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ------------------------------------------------------------ x In re: : Chapter 11 : FRANCESCA’S HOLDINGS CORPORATION, : Case No. 20-13076 (BLS) et al.,1 : : Jointly Administered Debtors. : Hearing Date: January 4, 2021 at 10:00 a.m. (EST) : Objection Deadline: December 28, 2020 at 4:00 p.m. (EST) ------------------------------------------------------------ x f DEBTORS’ APPLICATION FOR ENTRY OF AN ORDER (I) AUTHORIZING THE RETENTION AND EMPLOYMENT OF FTI CAPITAL ADVISORS, LLC AS INVESTMENT BANKER AND FINANCIAL ADVISOR TO THE DEBTORS NUNC PRO TUNC TO THE PETITION DATE AND (II) WAIVING CERTAIN INFORMATION REQUIREMENTS OF LOCAL RULE 2016-2 Francesca’s Holdings Corporation (“FHC”) and its affiliated debtors and debtors in possession (collectively, the “Debtors”) respectfully request entry of order (i) authorizing the retention and employment of FTI Capital Advisors, LLC (“FTICA”), in partnership with its parent, FTI Consulting, Inc. (“FTI Consulting” and together with FTICA, “FTI”) as investment banker and financial advisor to the Debtors, effective nunc pro tunc to the Petition Date (as defined below) and (ii) waiving certain information requirements of rule 2016-2 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local Rules”) and the guidelines (the “Trustee Guidelines”) of the Office of the U.S. Trustee. In support of this application, the Debtors submit the declaration of Glenn Tobias, 1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are Francesca’s Holdings Corporation (4704), Francesca’s LLC (2500), Francesca’s Collections, Inc. (4665), and Francesca’s Services Corporation (5988). The address of the Debtors’ corporate headquarters is 8760 Clay Road, Houston, Texas 77080. Case 20-13076-BLS Doc 135 Filed 12/14/20 Page 2 of 18 Chief Executive Officer of FTICA (the “Tobias Declaration”).2 In further support of this application, the Debtors respectfully state as follows: JURISDICTION AND VENUE 1. This Court has jurisdiction to consider this motion under 28 U.S.C. §§ 157 and 1334 and venue is proper under 28 U.S.C. §§ 1408 and 1409. This is a core proceeding under 28 U.S.C. § 157(b).3 BACKGROUND 2. On December 3, 2020 (the “Petition Date”), each of the Debtors filed a voluntary petition with this Court for relief under chapter 11 of title 11 of the United States Code, §§ 101-1532, et seq. (the “Bankruptcy Code”). The Debtors continue to manage and operate their business as debtors in possession under sections 1107(a) and 1108 of the Bankruptcy Code. On December 8, 2020, the Court entered an order directing joint administration of the Debtors’ chapter 11 cases for procedural purposes only pursuant to rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and Local Rule 1015-1 [D.I. 80]. 3. On December 11, 2020, the Office of the United States Trustee for the District of Delaware (the “U.S. Trustee”) appointed a statutory committee of unsecured creditors pursuant to section 1102(a)(1) of the Bankruptcy Code [D.I. 122]. 4. Francesca’s is a specialty retailer that operates a nationwide-chain of boutiques providing a diverse assortment of apparel, jewelry, accessories, and gifts. As of December 1, 2020, the Debtors operate 558 boutiques in 45 states and the District of Columbia 2 The Tobias Declaration is attached to this application as Exhibit B. 3 Pursuant to Local Rule 9013-1(f), the Debtors hereby expressly confirm their consent to the entry of a final order by this Court in connection with this motion if it is later determined that this Court, absent consent of the parties, cannot enter final orders or judgments in connection therewith consistent with Article III of the United States Constitution. 2 Case 20-13076-BLS Doc 135 Filed 12/14/20 Page 3 of 18 and also serve their customers through www.francescas.com, their e-commerce website, and their recently launched mobile app. Additional information on the Debtors’ business and capital structure, as well as a description of the reasons for filing these cases, is set forth in Andrew Clarke’s Declaration in Support of the Debtors’ Chapter 11 Petitions and First Day Pleadings [D.I. 36]. RELIEF REQUESTED 5. By this application, the Debtors respectfully request entry of an order, substantially in the form attached as Exhibit A (the “Proposed Order”), (a) authorizing the retention and employment of FTI as the Debtors’ investment banker and financial advisor, effective nunc pro tunc to the Petition Date, in accordance with the terms and conditions set forth in that certain engagement letter between FTI and O’Melveny & Myers LLP (“O’Melveny”), on behalf of the Debtors, dated August 12, 2020 (the “Engagement Letter”), a copy of which is attached as Exhibit C and incorporated herein by reference and (b) waiving certain information requirements of Local Rule 2016-2 and the Trustee Guidelines. The relief requested is appropriate under sections 327(a), 328(a), and 1107(b) of the Bankruptcy Code, Bankruptcy Rules 2014(a) and 2016(a), and Local Rules 2014-1 and 2016-2. FTI’s Qualifications and the Need for FTI’s Services 6. The Debtors submit this application because of their need to retain a qualified investment banker and financial advisor to assist them in the critical tasks associated with guiding the Debtors through these chapter 11 cases. The Debtors believe that the retention of an investment banker and financial advisor is necessary and appropriate and will substantially enhance their attempts to maximize the value of their estates. FTI is well qualified to provide these services in light of their extensive knowledge and expertise with respect to chapter 11 proceedings. 3 Case 20-13076-BLS Doc 135 Filed 12/14/20 Page 4 of 18 7. The Debtors are familiar with the professional standing and reputation of FTI. The Debtors understand that FTI has a wealth of experience in providing financial advisory services in restructurings and reorganizations and enjoys an excellent reputation for services it has rendered in large and complex chapter 11 cases on behalf of debtors and creditors throughout the United States. 8. FTI has been engaged by the Debtors since August 12, 2020, and has become familiar with the Debtors’ business, management, financial affairs, and capital structure. Specifically, FTI advised the Debtors prior to the Petition Date regarding, among other things, certain in- and out-of-court restructuring alternatives and ultimately advised the Debtors in preparation for these chapter 11 cases. The Debtors thus believe FTI is both well qualified and uniquely able to advise the Debtors in these chapter 11 cases in an efficient and timely manner. Scope of Services 9. Subject to the Court’s approval, FTI will provide such investment banking and financial advisory and restructuring services as FTI and the Debtors deem appropriate and feasible in order to advise the Debtors in the course of these chapter 11 cases, including but not limited to the following: Investment Banking (a) Advise the Debtors and the Board of Directors of FHC (the “Board”) regarding the potential M&A alternatives and to the extent necessary and requested by the Board, debt capital alternatives (in either case a “Transaction” or “Transactions”); (b) Advise the Debtors regarding criteria to identify interested Transaction parties aligned to comply with the Debtors’ objectives; (c) Advise the Debtors regarding parties that may be interested in a Transaction (the “Transaction Parties”); 4 Case 20-13076-BLS Doc 135 Filed 12/14/20 Page 5 of 18 (d) Assist the Debtors with the preparation of materials to supplement the Debtors’ public filings, to be provided to potential Transaction Parties, as appropriate and if requested; (e) Outreach to identified Transaction Parties, distribution and negotiation of confidentiality agreements; (f) Facilitate and manage a virtual data room with all necessary due diligence and information requirements; (g) Screening, including due diligence, ranking, and evaluating any proposals received from Transaction Parties; (h) Preparation and coordination of management presentations and meetings; (i) Advise the Debtors and work with counsel during negotiations and document preparation to close Transactions; and (j) Provide timely reporting to the Debtors regarding the status and progress of the Transaction process. Financial Advisory / Restructuring (a) Review and provide feedback to the Debtors related to the Debtors’ weekly cash forecasting, including any lender reporting; (b) Assist the Debtors in managing cash spending to preserve and maximize cash availability; (c) Assist with respect to communications with lenders, investors, and other key stakeholders, as appropriate; (d) Provide input and assistance with the preparation of materials for these discussions; (e) Assist the Debtors with responding to stakeholder information requests; (f) Discuss with the Debtors appropriate strategies for negotiations with stakeholders; (g) Assist the Debtors with a high level assessment of liabilities and payment/claims waterfall including contingent/off-balance sheet liabilities; (h) Determine any additional analyses needed to develop strategy for required resolution of any liabilities; (i) Assist in the preparation of information and analysis necessary for the confirmation of a plan in these chapter 11 proceedings; 5