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Claire's Stores files for bankruptcy

20 March, 2018, 04:13 | Author: Samuel Sharp
  • Claire's Accessories

A popular mall jewelry store known for its ear piercing, faux rhinestones and fluorescent plastic bracelets is the latest to file for Chapter 11 bankruptcy protection.

The company sells its products at more than 7,500 locations in 45 countries around the world.

Unlike other retailers that have come before it, Claire's has commenced its restructuring process from a position of unique operational strength.

Claire's is the latest in a long list of recent USA retail bankruptcies, including Gymboree, Gander Mountain, Sports Authority Inc., Toys "R" Us, Vitamin World, RadioShack, The Limited, Rue21 and Payless shoes, among others.

The company does not expect the restructuring to affect its stores and operations in the United Kingdom and across Europe. It has pierced more than 100 million ears worldwide. It said it can compete with the shift to online shopping, arguing that its "iconic ear piercing services are unmatched and cannot be replicated online".

The Company has obtained $135 million in debtor-in-possession (DIP) financing commitments, including an asset-based lending facility and a term loan from Citigroup Global Markets Inc. The company now has $1.9 billion in debt on its books, with $1.4 billon of funded debt due to mature next year.

"This transaction substantially reduces the debt on our balance sheet", said chief executive officer Ron Marshall said in statement.

The Chapter 11 filing, which includes a dozen affiliates, arrived with a pre-negotiated restructuring agreement with an ad hoc group of first lien creditors, led by Elliott. "We will complete this process as a healthier, more profitable company".

Bon-Ton Stores, which owns Younkers, also filed for Chapter 11 protection last month. The retailer is still feeling the backlash from a string of private equity buyouts about a decade ago that saddled Claire's with burdensome payments.



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