Key Takeaways
- • Claire's filed for bankruptcy protection for the second time in September 2025, marking the collapse of a tween jewelry retailer that had been under private equity ownership since Apollo Global Capital's $3.1 billion leveraged buyout in 2007.
- • The initial LBO in 2007 saddled Claire's with $2.5 billion in debt, which persisted through a failed IPO attempt in 2013; by the company's first bankruptcy filing 11 years later, long-term debt had reached $2.1 billion, and by the second filing, liabilities exceeded $1 billion.
- • Following the second bankruptcy, PE firm Ames Watson acquired Claire's and agreed to keep the majority of the retailer's 1,000+ stores operational across the U.S. and Canada, which employ over 17,300 workers.
- • Claire's represents a pattern among PE-backed retailers—alongside Joann's, Red Lobster, and Bed Bath & Beyond—where excessive leverage from initial acquisition financing proved structurally unsustainable in shifting retail environments.
Summary
Claire's, the iconic tween jewelry and piercing retailer, filed for Chapter 11 bankruptcy protection for the second time in September 2025, exemplifying how leveraged buyout debt structures can undermine retail operations over extended periods. Apollo Global Capital acquired the company in 2007 for $3.1 billion in a traditional LBO structure, financing the deal with $2.5 billion in debt that remained a burden throughout the company's operational history, including a failed IPO attempt in 2013.
The debt load proved insurmountable despite 18 years of operational management. By the time Claire's filed for its first bankruptcy filing—approximately 11 years after the initial acquisition—the company carried $2.1 billion in long-term debt. The restructuring that followed transferred ownership to creditors and private equity firms Elliott Investment Management and Monarch Alternative Capital. However, conditions did not stabilize. A second bankruptcy filing followed, with liabilities exceeding $1 billion according to bankruptcy court filings.
During the second bankruptcy proceeding, private equity firm Ames Watson intervened by acquiring Claire's and committing to maintain the majority of the retailer's operational footprint. The company operates more than 1,000 stores across the U.S. and Canada with approximately 17,300 employees, representing a significant retail presence in North American shopping centers.
The Claire's case illustrates a recurring pattern in private equity retail acquisitions where acquisition financing creates structural challenges that persist across economic cycles and market shifts. Similar dynamics have played out at Joann's, Red Lobster, and Bed Bath & Beyond—all PE-backed retailers that filed for bankruptcy under the weight of leverage incurred during acquisition. The throughline remains consistent: initial debt levels from the buyout transaction constrain operational flexibility and reduce resilience when retail environments contract or consumer preferences shift away from the core business model.
The debt load proved insurmountable despite 18 years of operational management. By the time Claire's filed for its first bankruptcy filing—approximately 11 years after the initial acquisition—the company carried $2.1 billion in long-term debt. The restructuring that followed transferred ownership to creditors and private equity firms Elliott Investment Management and Monarch Alternative Capital. However, conditions did not stabilize. A second bankruptcy filing followed, with liabilities exceeding $1 billion according to bankruptcy court filings.
During the second bankruptcy proceeding, private equity firm Ames Watson intervened by acquiring Claire's and committing to maintain the majority of the retailer's operational footprint. The company operates more than 1,000 stores across the U.S. and Canada with approximately 17,300 employees, representing a significant retail presence in North American shopping centers.
The Claire's case illustrates a recurring pattern in private equity retail acquisitions where acquisition financing creates structural challenges that persist across economic cycles and market shifts. Similar dynamics have played out at Joann's, Red Lobster, and Bed Bath & Beyond—all PE-backed retailers that filed for bankruptcy under the weight of leverage incurred during acquisition. The throughline remains consistent: initial debt levels from the buyout transaction constrain operational flexibility and reduce resilience when retail environments contract or consumer preferences shift away from the core business model.
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