No buyers for 350 stores: US fast-fashion giant Forever 21 files for bankruptcy

Grappling with competition from online retailers and the declining popularity of shopping malls, renowned U.S. fast-fashion retailer Forever 21 filed for bankruptcy on Sunday under Chapter 11.

Chapter 11 allows businesses to restructure their debts and continue operations under court supervision rather than liquidating their assets.

Nevertheless, the company is now expected to undergo liquidation after failing to secure a buyer for its approximately 350 U.S. stores, Reuters reported.

On the other hand, its trademark and intellectual property, still owned by Authentic Brands Group, could continue to exist in a different capacity.

This is the company’s second bankruptcy filing in six years, having first filed for Chapter 11 in 2019 before being rescued by Sparc, a partnership between trademark owner Authentic Brands Group and other investors.

The company stated that it will begin clearance sales in its stores while simultaneously undergoing a court-monitored process to explore potential buyers for some or all of its assets.

Forever 21 reported estimated assets between $100 million and $500 million. Meanwhile, its liabilities range from $1 billion to $10 billion, with between 10,001 and 25,000 creditors, according to its bankruptcy filing in the District of Delaware.

Forever 21’s international stores remain open

If the sales process is successfully completed, Forever 21 indicated that it may transition from a full shutdown to a transaction that allows the business to continue operating.

The company also assured that its U.S. stores and website will remain open to serve customers, while its international locations will not be impacted.

Founded in Los Angeles in 1984, Forever 21 became a popular destination for young shoppers looking for fashionable yet affordable clothing.

By 2016, the brand had expanded to around 800 locations worldwide, including 500 in the United States.