Fashion accessories retail chain Claire's Stores is preparing to file for bankruptcy in the coming weeks, people with knowledge of the plans told Bloomberg last week. The company is reportedly closing in on a deal where control would pass from Apollo Global Management LLC, which owns Claire's, to lenders including Elliott Capital Management and Monarch Alternative Capital, according to the people who asked not to be identified. Venor Capital Management and Diameter Capital Partners are also involved, the people said. The move should help ease the $2 billion debt load at Claire’s, as well as continue operating and keep creditors at bay until a turnaround plan can be formalized.
Total Retail's Take: If Claire's does end up filing for bankruptcy, it will join Walking Company Holdings Inc. and Bon-Ton Stores as retailers that have filed for bankruptcy so far this year. What was Claire's downfall? The debt of malls. Like other chains with a heavy mall presence, Claire’s has had to contend with declining customer traffic and online competition. While it has worked to find new sources of revenue, including agreements to sell its accessories for pre-teen girls in CVS pharmacies and Giant Eagle supermarkets, its debt load was becoming just too heavy to handle.