Claire’s Stores Inc. has filed for chapter 11 bankruptcy and said it plans to lower its debt by about US $1.9 billion.
The company will continue to operate its approximately 1,600 Claire’s and Icing brand stores in the United States during the bankruptcy process and expects to complete it by September. International stores are not part of the restructuring agreement.
“This transaction substantially reduces the debt on our balance sheet,” Claire’s CEO Ron Marshall said in a statement. “We will complete this process as a healthier, more profitable company.”
Claire’s said it reached an agreement with creditors including Elliott Management Corp and Monarch Alternative Capital LP, which will provide it with about US $575 million in new capital.
Claire’s struggles stem from a deal it struck more than a decade ago that left it burdened with debt.
In 2007, Apollo Management, a private equity firm, bought Claire’s for US $3.1 billion and took the company private in what’s known as a leveraged buyout.