U.S. accessories retailer Claire's Stores Inc. said March 19 that it filed for Chapter 11 bankruptcy protection at the U.S. Bankruptcy Court for the District of Delaware and initiated a financial restructuring process to reduce its overall indebtedness by about $1.9 billion. The market was expecting this development.

Claire's, known for its shopping mall presence and ear piercing services, said it has executed a restructuring support agreement with its ad hoc group of first lien creditors led by Elliott Management Corp. and Monarch Alternative Capital LP. This group of creditors collectively holds about 72% of the company's first lien debt, 8% of its second lien notes and 83% of its unsecured notes. These creditors agreed to provide Claire's with approximately $575 million of new capital, which includes a $75 million asset-based lending facility, a $250 million first lien term loan and $250 million as a preferred equity investment.

The company also said it has received $135 million in debtor-in-possession financing commitments, including an asset-based lending facility and a term loan from Citigroup Global Markets Inc.

The company plans to continue operations during its restructuring and expects to complete the Chapter 11 process in September with more than $150 million in liquidity.

The retailer said it began its restructuring process "from a position of unique operational strength" compared to other retailers. Claire's said it is current on payments to its trade vendors and has the liquidity to make timely payments to its suppliers.

Claire's said it expects to report net income of $29 million and net sales of about $1.32 billion for fiscal year 2017. The company said it expects its adjusted EBITDA for fiscal year 2017 to be $212 million, up nearly 13% on the year.

The retailer also said it expects to open 4,000 stores in 2018.

Claire's is the latest retailer to file for bankruptcy. On March 15, Toys R Us Inc. filed new bankruptcy court documents to liquidate its business.