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Mattoon Claire's staying open during chain's bankruptcy process

Mattoon Claire's staying open during chain's bankruptcy process

Blaming an over-leveraged, $2.1 billion debt load and a tough retail environment, Claire's Stores Inc. drove its 7,500-location beauty, accessories and ear piercing business into DE bankruptcy court on Monday, proposing to restructure $1.9 billion in obligations.

Claire's said it expects to operate its 7,500 locations in 45 countries as usual during restructuring.

Last week, Toys "R" Us gave up its fight to restructure operations and made a decision to liquidate all of its USA stores.

Claire's Stores Inc., a fashion accessories chain, has filed for bankruptcy. The Company's iconic ear piercing services are unmatched and can not be replicated online. Claire's had more than one-point-three billion dollars in sales a year ago. It has pierced more than 100 million ears worldwide.

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

Claire's plans to emerge from bankruptcy later this year, but if it will survive until the September target date, and what will be left of the company if it does, remains to be seen.

"This transaction substantially reduces the debt on our balance sheet", Ron Marshall, Claire's CEO, said in the statement.

Creditors led by Elliott Management and Monarch Alternative Capital have agreed to provide the company with about $575 million of new capital. Mr. Marshall continued, "We will complete this process as a healthier, more profitable company, which will position us to be an even stronger business partner for our suppliers, concessions partners, and franchisees".

It is, therefore, not like the Chapter 11 filing made by Toys "R" Us, which had weak financials.

Bon-Ton Stores, which owns Younkers, also filed for Chapter 11 protection last month.

Its revenue has declined $200 million since 2014 and the company faces large debts after a private equity buyout.

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