More than 2,000 jobs are hanging in the balance as two prominent high street chains, Claire's and The Original Factory Shop, stand on the precipice of administration. Their owner, the private equity firm Modella Capital, has initiated insolvency proceedings for both retailers, citing an unsustainable trading environment.
Insolvency Proceedings Begin for Struggling Chains
Modella Capital confirmed on Monday, 6th January 2026, that it had commenced the process of appointing administrators for both businesses. The firm stated that administration was now the "only option" after exhaustive efforts to rescue the companies failed. A notice has been filed with the high court for The Original Factory Shop, granting the firm a critical 10-day protection period from creditors to allow for final negotiations.
The potential collapse threatens a total of 2,550 jobs across the UK. Claire's, the accessories chain popular with younger shoppers, employs approximately 1,350 people across its 154 UK stores. The Original Factory Shop, a discount home and fashion retailer, supports around 1,200 roles.
A Year of Turbulent Ownership and Market Pressures
The situation marks a rapid downturn for both brands under Modella's stewardship. The investment group purchased around half of Claire's UK business from administrators just last September. Its acquisition of The Original Factory Shop occurred even more recently, having bought the chain from Duke Street Capital less than a year ago.
In an official statement, Modella Capital blamed a perfect storm of economic challenges. "A combination of very weak consumer confidence, highly adverse government fiscal policies and continued cost inflation is causing many established and much-loved businesses to suffer badly," a spokesperson said. This news comes just half a year after The Original Factory Shop underwent a significant restructuring, which involved moving its head office from Burnley to Bolton and securing rent reductions.
Broader Implications for the UK High Street
The potential administrations underscore the severe pressures facing the UK's retail sector. Modella Capital has built a reputation for acquiring distressed high street names, having also purchased the former WH Smith high street arm (now TG Jones) and craft retailer Hobbycraft in August 2024. The advisory firm Kroll is reportedly lined up to handle the proposed administration process for Claire's.
This development raises serious questions about the future of physical retail in an era of squeezed household budgets and shifting consumer habits. The fate of the 2,550 employees now rests on the outcome of last-ditch talks during the creditor protection window.
