Fast-fashion retailer Forever 21’s United States operating company on Sunday (Mar 16) filed for Chapter 11 bankruptcy for the second time in six years, hamstrung by dwindling mall traffic and mounting competition from online retailers.
The move likely means liquidation for the company, which was unable to find a buyer for its roughly 350 US stores. Its trademark and intellectual property – still held by an entity called Authentic Brands Group – may live on in a different form.
The rise of e-commerce, paired with the slow death of the American mega mall, has been an ongoing headwind for Forever 21. It previously filed for Chapter 11 in 2019 and was bought out of bankruptcy by Sparc, a joint venture between label owner Authentic Brands Group and mall operators Simon Property and Brookfield Asset Management Inc.
Forever 21 said it will conduct liquidation sales at its stores while simultaneously conducting a court-supervised sale and marketing process for some or all of its assets.
The company listed its estimated assets in the range of US$100 million to US$500 million, according to a filing with the bankruptcy court in the District of Delaware, with liabilities being in the range of US$1 billion to US$10 billion. The filing also showed creditors in the range of 10,001 to 25,000.
In the event of a successful sale, Forever 21 said it may pivot away from a full wind-down of operations to facilitate a going-concern transaction.
