Claire's said it is "confident" it will emerge from bankruptcy protection in September, and it believes it can compete with the shift to online shopping, arguing that its "iconic ear piercing services are unmatched and cannot be replicated online". Its global subsidiaries are not part of the filing.
The company's main problem was having to shoulder a heavy debt load from Apollo's 2007 leveraged buyout.
While mall traffic has been declining over the years with the rise of online shopping, Claire's says its beloved ear-piercing service is internet-proof since it can not be replicated on the web.
He said the costs of servicing that debt has "impacted the Debtors' ability to refresh store locations, drive product and growth initiatives, and further enhance their customer experience".
The fate of its 7,500 North American stores, including three in McAllen, and one each in Harlingen, Brownsville and Mercedes, isn't yet known.
Earlier this month, news broke that the company was looking to relinquish control to various creditors. It is the temple where 100 million people so far have gotten their ears pierced, and plenty more have bought cheap jewelry to complete their lewk. The company says it is working to reduce its debt by $1.9 billion.
The retail chain said it was entering the restructuring process from "a position of unique operational strength".
The move has Claire's following other recent bankruptcies by USA retailers including toy seller Toys "R" Us, athletic gear seller the Sports Authority and kids clothing chain Gymboree. The ad hoc group of first lien lenders will provide the company with about $575 million of new capital, including a $250 million first lien term loan.