Claire's, Icing announce Chapter 11 filing

Claire's has filed for bankruptcy. The hub for ear piercings at malls across America is the latest retailer to succumb to its massive pile of debt

The company reported its restructuring efforts are supported the vast majority of its debt-holders. The company began piercing ears in 1978. The company made $1.3 billion in net sales previous year, including $29 million in profit, but has been saddled with huge debt payments since private equity firm Apollo Global Management bought it in 2017.

Claire's Stores said on Monday its shops, including 378 in the United Kingdom, will remain open as it presses ahead with a financial restructure.

For retailers clamoring to stay afloat, the list of challenges as well as the proposed resolutions have become all too familiar.

Claire's is the latest in a string of recent USA retail bankruptcies including children's clothing chain Gymboree, athletic gear seller the Sports Authority and toy seller Toys "R" Us.

The company has a $183 million a year interest payment in debt.

Claire's hopes to keep its stores open, including locations at the Southlake Mall in Hobart, the Valparaiso Marketplace in Valparaiso, River Oaks Center in Calumet City, and Orland Square Mall in Orland Park. As of the filing, Apollo owns 98 percent of the company's equity, and around 28 percent of three types of the company's debt, totalling around $48 million, according to court filings.

Creditors led by Elliott Management and Monarch Alternative Capital have agreed to provide the company with about $575 million of new capital.

Claire's filed for Chapter 11 protection Monday morning.

However, in court filings and a company release today, Claire's sought to distinguish itself from peers that have taken the bankruptcy route, stating that it is "utilizing the Chapter 11 process to effectuate a balance sheet - not an operational - restructuring".

Claire's expects to complete the Chapter 11 process in September 2018, emerge with over $150 million of liquidity and reduce its overall indebtedness by approximately $1.9 billion.

Related news: