A Claire's storefront.

Bankrupt Claire’s Stores Inc. plans to file its pre-negotiated reorganization plan around April 9, and have Sept. 14 as its effective exit date from bankruptcy proceedings.

The affordable jewelry and accessories chain, which targets young women, teens and tweens, filed a voluntary Chapter 11 petition on Monday in a Delaware bankruptcy court seeking court protection. The company’s international operations are not part of the filing.

The company said its restructuring efforts are “supported by holders of approximately 72 percent of the company’s First Lien Debt, 8 percent of its Second Lien Notes and 83 percent of its Unsecured Notes.” The chain also said it is current on payments to its trade vendors and has ample liquidity to maintain its partnerships with vendors, “including by making timely payments on customary trade terms.”

Ron Marshall, Claire’s chief executive officer, said, “We will complete this process as a healthier, more profitable company, which will position us to be an even stronger business partner for our suppliers, concessions partners and franchisees.”

According to a court document filed with a Delaware Bankruptcy Court Monday by Scott E. Huckins, executive vice president and chief financial officer of Claire’s, the chain’s substantial debt load at $1.9 billion — and a cash interest expense of $162 million — needed to be restructured. The pre-negotiated plan with its debt holders will allow the company to effect a “comprehensive balance-sheet restructuring, effort to right-size the debtors’ footprint, preserve the going-concern value of the Claire’s Group’s businesses, and protect the jobs of thousands of the debtor’s employees.”

Huckins said Claire’s has a presence in 45 nations worldwide via a combination of more than 7,500 company-owned stores, concessions locations and franchised stores. Of those sites, 1,440 stores are company owned and average 1,000 square feet of selling space under the nameplates Claire’s and Icing in the U.S. and Puerto Rico. He also said a “Claire’s store is located in approximately 99 percent of major shopping malls throughout the United States.” Claire’s is the company’s core brand, while its Icing concept targets the older female consumer between ages 18 to 35. The retail model focuses on the “treasure hunt” format, and Huckins said the company estimated that it has “pierced more than 100 million ears worldwide.”

The cfo said the carefully curated merchandise assortment equals to adjusted earnings before interest, depreciation and amortization of $212 million for the 52-week period ended Feb. 3, versus revenues of about $1.3 billion. He also said the stores on average maintain about 13,000 stock keeping units at any given time, and sources from 500 vendors. The company employs 10,000, including 6,400 employees who work on a part-time basis.

The bankruptcy petition listed estimated assets at between $1 billion to $10 billion, and estimate liabilities in the same range. Its largest unsecured creditor is the Bank of New York Mellon at $221.5 million.

Rowland Schaefer founded Fashion Tress Industries in 1961 as a wig retailer. The company in 1973 acquired Claire’s Boutiques, a chain of 25-store jewelry chain. Following the acquisition, the focus of the company shifted to fashion jewelry and accessories. The ear-piercing service began in 1978, while the Icing business was started in 1996. Private equity firm Apollo Management acquired the company in 2007 in a $3.1 billion leveraged buyout.



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