Company closes in on deal to pass control from Apollo Global Management to lenders including Elliott Capital Management and Monarch Alternative Capital.

Claire’s Stores, the fashion accessories chain, is preparing to file for bankruptcy in the coming weeks, according to reports.

The company is reported to be closing in on a deal in which control would pass from Apollo Global Management to lenders including Elliott Capital Management and Monarch Alternative Capital. Venor Capital Management and Diameter Capital Partners are reported to be involved. The move should help ease the $2b debt load at Claire’s.

The current debt load is more than 10 times a key measure of its annual earnings, the result of its 2007 leveraged buyout by Apollo. More than $1.4b of its debt matures next year, and more immediate pressure comes from a $60m interest payment which is due on the 13th March. A Chapter 11 bankruptcy filing would allow the chain to continue operating and keep creditors at bay until a turnaround plan could be formalised.

Like other chains with a heavy mall presence, Claire’s has had to contend with declining customer traffic and online competition. It’s worked to find new sources of revenue, including agreements to sell in CVS pharmacies and Giant Eagle supermarkets.

Apollo paid $3.1b to acquire Claire’s from the family of founder Rowland Schaefer, and began expanding rapidly. It added about 350 stores between 2010 and 2013, with more than 2,700 globally by the time it filed plans that year to go public, according to a company document. But the chain struggled to remain profitable after the Apollo buyout, and Claire’s withdrew its initial public offering registration in early 2017.