Claire’s Stores, the fashion accessories chain where legions of preteens got their ears pierced, is preparing to file for bankruptcy in the coming weeks, according to people with knowledge of the plans.
A Chapter 11 bankruptcy filing in the US, which is typical for retailers, would allow the chain to continue operating and keep creditors at bay until a turnaround plan could be formalised.
The company is closing in on a deal in which control would pass from Apollo Global Management to lenders including Elliott Capital Management and Monarch Alternative Capital, according to sources. Venor Capital Management and Diameter Capital Partners are also involved. The move should help ease the $2 billion debt load at Claire's.
A spokesman for New York-based Apollo declined to comment. Representatives for Claire's and the creditors declined to comment or didn't respond to messages. New York-based Monarch specialises in distressed companies, while Elliott Capital is run by Paul Singer, the billionaire and activist investor.
Claire's has had to contend with declining customer traffic and online competition. It's worked to find new sources of revenue, including agreements in the US to sell in CVS pharmacies and Giant Eagle supermarkets.
- Bloomberg
