Bankruptcy News

We've summarized the latest docket activity and news for publicly traded companies currently operating under U.S. Bankruptcy Court protection.

Bankruptcy/Chapter 11 / Bonds

Claire's Stores Chapter 11 Petition Filed

Claire's Stores and 12 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 18-10584. The Company, which retails specialty jewellery and accessories, is represented by Daniel J. DeFranceschi of Richards, Layton & Finger. According to documents filed with the Court, "The Debtors do not believe that their current balance sheet is sustainable over the long term. Indeed, the Debtors have approximately $1.4 billion in funded debt that will mature in approximately one year or less. The Debtors' levered balance sheet has had a corresponding impact on the Debtors' liquidity and growth." The Company enters Chapter 11 having executed a restructuring support agreement (RSA) with members of an ad hoc first lien group and its equity sponsor, Apollo Global Management. The RSA includes a term sheet outlining the material terms of a pre-negotiated plan of reorganization. Claire's Stores notes, "Among other things, the transactions contemplated by the Plan Term Sheet will substantially deleverage the Debtors' capital structure and bring the Debtors' otherwise healthy business into alignment with its operating environment." The pre-negotiated plan provides for the following: (i) a new money investment of up to $575 million, comprised of (a) a $75 million new exit ABL revolving credit facility, (b) a $250 million new exit first lien term loan and (c) up to $250 million of preferred stock or equity interests in the reorganized Debtors; and (ii) a substantial reduction of the Company's existing funded debt. The Company notes, "The transactions contemplated by the Plan Term Sheet provide for 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 Debtors' employees."

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