Teen Fashion Retailer Claire’s Files for Chapter 11 Protection
Today, Claire’s Stores, Inc., along with seven affiliates and subsidiaries filed for Chapter 11 bankruptcy protection in the Delaware (Case No. 18-10584). Claire’s is a well-known specialty retailer of teen and young women jewelry, accessories, and beauty products, as well as ear piercings at local malls, based in Cook County, Illinois.
Back in January 2018, I included them on my list of Retailers to Watch for a Bankruptcy Filing in 2018.
According to Court pleadings, the company negotiated a restructuring support agreement and plan term sheet with an ad hoc group of its first lien noteholders and is seeking approval of up to $135 million in DIP financing.
The company lists 92 stores to close, on top of the 100 that it closed last year. Still, Claire’s indicates that it intends to operate the remaining 1,600 Claire’s and Icing brand stores through a restructuring.
Many landlords were not paid March rents; a tactic that debtors like Claire’s used to avoid paying rent during the early stages of a bankruptcy proceeding. Under the Bankruptcy Code, the retailer would have to pay April rent to stores it is operating.