Claire's jewelry chain files for bankruptcy

Claire's Accessories

Claire's Accessories

Claire's, the ear-piercing and girls' accessories chain, has filed for Chapter 11 bankruptcy.

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

Claire's is owned by private equity firm Apollo Global Management, which paid 3.1 billion U.S. dollars for the company in 2007.

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

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.

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Claire's Stores is the latest victim of declining traffic at US malls.

Claire's, which is owned by Apollo Global Management, said that when the process is complete in September 2018, it will have more than $150m in cash, and will have brought down its debt burden significantly.

Toys "R" Us announced last week that it would close or sell all its stores after filing for Chapter 11 bankruptcy protection previous year.

Claire's has been struggling with a heavy debt load that left it with fewer options in dealing with online competition. 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".

While compelling "over the long term", Claire's business model wasn't enough to keep the debt-saddled company going amid a year-over-year 8 percent drop in mall traffic, Huckins added.

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