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Claire’s Filing for Bankruptcy After Asbestos Found in Makeup

Asbestos Exposure & Bans

Written by Matt Mauney

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Reading Time: 4 mins

Publication Date: 03/13/2018

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Claire’s, a fashion accessory retail chain marketed to young girls and preteens, is reportedly filing for bankruptcy as a second round of lab tests found deadly asbestos fibers in the store’s cosmetics products.

Bloomberg News reported last week that Claire’s Stores Inc. plans to file for bankruptcy in the coming weeks to ease the $2 billion debt load.

The deal would transfer control from Apollo Global Management LLC to lenders, including Elliott Capital Management and Monarch Alternative Capital.

U.S. PIRG, a consumer and public interest research group, released a report Tuesday revealing three Claire’s makeup products tested positive for asbestos — the naturally occurring mineral linked to mesothelioma cancer.

The report comes less than three months after lab tests conducted by Scientific Analytical Institute (SAI) found asbestos-contaminated talc in 17 cosmetic products acquired from Claire’s stores across the country.

Claire’s issued a recall of nine products in December 2017, despite rejecting SAI’s report and assuring customers that their products are asbestos-free.

“Despite Claire’s assurances that their products were uncontaminated, we found asbestos in three of the products that we purchased after Claire’s voluntarily pulled the original nine contaminated items off the shelf,” the U.S. PIRG report reads. “We are waiting to hear if Claire’s will pull these other three products off the shelves after we shared this information with the company, and we are waiting to hear if Claire’s is willing to do additional work to ensure that their consumers are safeguarded from asbestos contamination in their products.”

Four Companies, 15 Products Tested for Asbestos

The U.S. PIRG report used lab results from STAT Analysis Corporation, which is accredited for the U.S Environmental Protection Agency’s Method for the Determination of Asbestos in Bulk Building Materials.

STAT tested 15 talc-containing cosmetic products made by four companies: L’Oreal, Cover Girl, NYX Professional Makeup and Claire’s.

Asbestos was found in three of those products, all manufactured and sold by Claire’s.

The three products are different from the 17 tested by SAI and the nine brands recalled in December. The products under the latest tests include:

Claire’s Contour Palette
Claire’s Shadow and Highlight Finishing Kit
Claire’s Compact Powder (White)

STAT researchers used transmission electron microscopy (TEM) to determine how many tremolite asbestos fibers per gram each product contained.

The compact powder contained the highest concentration of asbestos fibers, with 106,383 fibers of asbestos per gram in first-round tests and 153,846 fibers per gram in a retest.

Talc — a common ingredient in cosmetics and other consumer products — naturally forms with certain minerals, including asbestos.

After being notified of the U.S. PIRG report, Claire’s released a statement on its website criticizing STAT’s testing methods. The retailer also referenced lab tests conducted after the SAI report that certify its products are asbestos-free.

“Claire’s categorically denies that the testing by STAT, relied upon by PIRG, is accurate,” the company’s statement said. “In addition, all our powder-based cosmetics use the same base formulation, utilizing Merck certified asbestos-free talc, which is the same talc used in other well-known cosmetic brands.”

Claire’s Cites Debt as Reason for Bankruptcy

Claire’s Stores Inc. is $2 billion in debt, people with knowledge of the Chapter 11 bankruptcy plans told Bloomberg.

Filing for bankruptcy and passing control to its lenders will allow Claire’s to continue operating its retail locations. The company currently operates nearly 2,000 stores in the U.S., mostly in shopping malls and outlets.

The retailer’s website claims it has pierced more than 100 million ears since it began the service in 1978.

But declining sales and increasing online competition has led to hard times.

Claire’s withdrew a public offering registration in early 2017. Apollo Global Management acquired Claire’s in 2007 for $3.1 billion.