Claire's blames its bankruptcy on dying shopping malls

Claire's blames its bankruptcy on dying shopping malls

Claire's did not indicate it planned to close any of its stores, and its worldwide subsidiaries are not part of the USA bankruptcy filing.

Claire's debt costs the company $183 million a year in interest payments, according to Bloomberg. The filing impacts about 1,600 Claire's and Icing brand stores in the United States.

Claire's executives said they hope the company will emerge from bankruptcy restructuring in September.

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The company cited data showing that traffic to malls has declined by 8% in the past year.

The company pointed to strong earnings minus debt costs and ear piercing services that are not affected by online competition. The chain, which said it operates in 99 percent of USA malls, selling low-cost cubic zirconia jewelry and other accessories, was purchased by private equity firm Apollo Global Management for $3.1 billion in 2007.

In 2007, Apollo Management, a private equity firm, bought Claire's for $3.1 billion and took the company private in what's known as a leveraged buyout.

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Prior to the much-anticipated filing, the retailer, now owned by Apollo Global Management, devised a restructuring plan with two of its primary lenders, Elliott Management Corp. and Monarch Alternative Capital.

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

Gymboree and Sports Authority are among others that have filed for bankruptcy in recent years.

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The organization has stores in around 99% of US malls, according to a court filing. The company's bankruptcy doesn't include $245 million in funded debt at affiliates, according to court papers. The company did not indicate it plans to close any locations.

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