In March of this year, Claire’s began to crumble under the weight of just over $2 billion in debt. With stores in nearly every mall in America, the ear-piercing giant was feeling the decline of the mall as we know it. Unable to pierce ears over the internet, Claire’s has suffered the same reduction in foot traffic as most of the stores in malls have these days. Chapter 11 bankruptcy became inevitable. However, this particular bankruptcy story may have a successful ending.
Chapter 11 Filing
Claire’s has pierced over 100 million ears around the world. Unfortunately, they hitched their wagon to thousands of malls that are seeing less and less traffic every year. However, many believe the real reason they are over $2 billion in debt is that, in 2007, a private equity firm called Apollo Management bought the company for $3.1 billion and took them private.
As this happened just before the market plummeted in 2008, debt piled up for a few years and the company could not find its way out of the rubble. Claire’s leadership said they believed they could rid themselves of about $1.9 billion in debt and the bankruptcy filing would position the company to grow in the near future.
After only a few months, Claire’s has managed to reorganize under chapter 11 and:
- Obtain $575 million in new capital.
- Close about 5000 stores.
- Franchise over 600 stores to private companies.
- Pass control of the company from Apollo Management to their creditors.
- Expand its concession locations to further stimulate growth with reduced future risk.
There are always those that lose out when a company files for bankruptcy. Thousands of employees were laid off. While this is unfortunate, Claire’s leadership is hopeful that it opens doors for the company to hire again in the future.
If you or your company find yourself in a no-win situation, you need help. Navigating the bankruptcy process is complex and stressful. You need the skills and resources of an experienced bankruptcy attorney. Elias Dsouza understands the process of bankruptcy and can guide you and your company back to the path. Contact Elias Dsouza for a free consultation.