Claire's, which specialises in ear piercing, fashion jewellery and accessories for young women, is the latest U.S. retailer to run into trouble.
Claire's does not plan to close stores during the restructuring process.
Claire's, the ear-piercing and girls' accessories chain, has filed for Chapter 11 bankruptcy.
Claire's describes itself as the world's leading ear piercer and pointed out in the news release that the service can't be replicated online.
The company has struggled as mall traffic has declined and becomes the latest mall fixture to declare bankruptcy following Toys R Us and Sports Authority.
Like Toys R Us, Claire's was taken over by venture capital companies and saddled with huge debts.
Claire's said it reached an agreement with creditors including Elliott Management Corp and Monarch Alternative Capital LP, which will provide it with about $575 million in new capital.
According to court papers, a debtor-in-possession, or DIP loan to fund operations in bankruptcy will include $75 million revolver and a $60 million term loan with Citibank N.A.as an agent to other lenders.
The preteen accessory and jewelry store anticipates to restructure and reemerge as a "healthier, more profitable company" in September, ready for the holiday rush, CEO Ron Marshall said in a statement. Typically retailers use the Chapter 11 filing to announce closings.
In a statement the company said it was "confident" that it would emerge from the restructuring and had "commenced its restructuring process from a position of unique operational strength".