US-based teen jewellery and accessories retailer Claire’s has filed for Chapter 11 bankruptcy protection, blaming the lower customer traffic at shopping centres, where 99% of its stores are located.

Claire’s operates 7,500 stores across the world and, according to the court filing ‘has pierced over 100,000,000 ears worldwide’.

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The company has been struggling with nearly $2 billion of debt and agreed with Ad Hoc Group of First Lien Creditors led by Elliott Management Corp. and Monarch Alternative Capital LP to a restructuring support agreement (RSA) to cut down its debt by approximately $1.9 billion.

Following the RSA, members of the Ad Hoc Group of First Lien Creditors have agreed to provide Claire’s with approximately $575 million of new capital, including financing commitments for a new $75 million asset-based lending facility, a new $250 million first lien term loan, and $250 million as a preferred equity investment.

With these commitments, Claire’s expects to complete Chapter 11 process in September, emerging with more than $150 million of liquidity.

International subsidiaries of Claire’s are not part of the US filings.

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“This transaction substantially reduces the debt on our balance sheet and will enhance our efforts to provide the best possible experience for our customers..”

Claire’s CEO Ron Marshall said: “This transaction substantially reduces the debt on our balance sheet and will enhance our efforts to provide the best possible experience for our customers.

“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.”

In the bankruptcy filing, Claire’s announced the company will shut down 92 stores across the US in March and April this year. The closures will impact only mall-based stores.

A voluntary Chapter 11 filing enables a company to continue its operations while it decides on a strategy to return to profitability.

In 2007, private equity firm Apollo Management acquired Claire’s for approximately $3.1 billion.