Fast-fashion retailer Forever 21 files for bankruptcy in US, second time in six years

Crippled by shrinking footfall in malls and stiff competition from online players, the US operating entity of fast-fashion chain Forever 21 filed for Chapter 11 bankruptcy on Sunday, its second such move in six years, reported Reuters.

Chapter 11 bankruptcy allows a business or individual to reorganise their debts while continuing operations.

With no buyer emerging for its roughly 350 stores across the United States, the retailer faces likely liquidation, though its intellectual property and trademark, owned by Authentic Brands Group, could find a new lease of life.

According to court documents filed in Delaware, Forever 21’s assets could range from $100 million to $500 million, dwarfed by liabilities estimated between $1 billion and $10 billion.

The company plans to kick off liquidation sales at its outlets while exploring a court-overseen process to offload assets.

A successful deal could steer it away from a complete closure toward a viable ongoing operation, it said.

Forever 21 assured customers that its US stores and online platform will keep functioning, with operations outside the country unaffected.

The retailer had filed Chapter 11 bankruptcy in 2019 after which it was scooped up by Sparc—a joint venture of Authentic Brands, Simon Property Group, and Brookfield Asset Management.

Authentic Brands’ CEO Jamie Salter last year dubbed the 2019 purchase “the biggest mistake I made.”

In January, Sparc merged with JC Penney—owned by Simon Property since 2020—to form Catalyst Brands, Forever 21’s current parent.

Launched in 1984 by South Korean immigrants in Los Angeles, Forever 21 once reigned as a go-to for budget-conscious, trend-savvy youth, peaking with 800 stores worldwide by 2016, including 500 in the US.