Fashion accessories chain Claire’s has filed a notice of intention to appoint administrators in the UK and Ireland at the High Court.
Its chief executive Chris Cramer described the decision as a “difficult” one to take and said its 278 shops in the UK and 28 in Ireland would remain open “while we explore the best possible path forward”.
Cramer was quoted when the firm filed for Chapter 11 bankruptcy in Delaware in the US earlier this month as blaming “increased competition, consumer spending trends and the ongoing shift away from brick-and-mortar retail” for the firm’s impending collapse.
He also cited “debt obligations” and wider economic turmoil. A £375m loan is due to be repaid in December next year, according to reports.
Speaking on Wednesday, Cramer described the current environment as a “challenging period”.
The latest news puts 2,150 jobs at risk. Insolvency practitioners at Interpath Advisory have been trying to sell the business and expect to be appointed as administrators in the coming days.
Interpath chief executive Will Wright said they will “assess options for the company” once appointed, including a potential sale.
Claire’s recorded a pre-tax loss of £4m on falling sales of £137m for the year to 3rd February 2024.
The firm is controlled by former creditors from an earlier 2018 bankruptcy in the US, including investment firms Elliott Management Corp and Monarch Alternative Capital LP.
The wider group has 2,750 stores in 17 countries.
Michael Lynch, partner at city law firm DMH Stallard and an insolvency and restructuring specialist, said: “Given that Claire’s in the US filed for bankruptcy in the US, it comes as little surprise that Claire’s UK business is also in distress.
“Stakeholders and lenders have presumably exhausted viable refinance and solvent restructuring options.
“Should Claire’s enter administration, and dependent on the purpose of the administration, the administrators could sell the underlying company as a going concern or sell its business and assets, thereby saving potential job losses.
“The recent press release of an impending collapse, with a quote from prospective insolvency practitioners will allow interested parties to engage in any sale process.”