Claire's Stores Files Chapter 11 With Financing Support from Citigroup

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Saddled with a heavy debt load from a leveraged private equity buyout, on March 19, teen jewelry fave Claire's Stores filed for Chapter 11 in DE bankruptcy court.

Mall jewelry chain Claire's Stores announced its filing Monday, stating in a news release it hopes to shed huge debts totaling an estimated $1.9 billion.

Claire's has more than 7,500 stores in 45 countries. Worldwide subsidiaries of Claire's are not part of the US filings.

The company's main problem was having to shoulder a heavy debt load from Apollo's 2007 leveraged buyout. If all goes well, the company says that this will reduce its debt by roughly $1.9 billion.


Claire's is the latest USA retailer to seek financial help from a bankruptcy court.

While mall traffic has been declining over the years with the rise of online shopping, Claire's says its beloved ear-piercing service is internet-proof since it can not be replicated on the web.

The company accrued the almost $2 billion debt after Apollo Global Management LLC purchased it for $3.1 billion in 2007.

Claire's agreed to a restructuring plan with a group of creditors led by Elliott Managementand Monarch Alternative Capital, according to a statement Monday. "We will complete this process as a healthier, more profitable company". Cash flows from operations, coupled with the RSA and the Company's fully-underwritten $135 million DIP facility from Citi, will provide Claire's with ample liquidity to enter into, operate within, and emerge from chapter 11 seamlessly. Toys R Us announced last week it will liquidate all of its stores in the US. RadioShack filed for a second bankruptcy in March 2017.

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