Francesca’s Creditors Say Bankruptcy Designed to Favor Lenders

Shuttered clothing retail chain Francesca’s has run its bankruptcy case to benefit secured lenders at the expense of junior creditors and should be restricted from further tapping available cash until tightening up its budget, a committee of unsecured creditors said.

Francesca’s, in concert with its secured lenders, has set up a Chapter 11 process that is bleeding the company dry and may fail to fund priority payments owed to vendors and others, an official creditors’ committee said in a partially redacted filing Friday with the US Bankruptcy Court for the District of New Jersey.

“These cases appear to have been ...