Retail chain Forever 21 announced it will enter bankruptcy proceedings for a second time, and is set to permanently close all its U.S. stores while it seeks a buyer for the company. The Los Angeles-based F21 as well as some of its U.S. subsidiaries entered into a plan with lenders for Chapter 11 protections in a Delaware U.S. bankruptcy court. In 2019, the fashion retailer filed for Chapter 11 in order to “facilitate a global restructuring” that included the closing of most of its Asian and European international locations.
Brad Sell, chief financial officer of F21 OpCo, wrote in a news release: “While we have evaluated all options to best position the company for the future, we have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends .. Following the conclusion of our strategic review and after careful deliberation, we made the decision to file for Chapter 11 to implement a court-supervised marketing process to solicit a going concern transaction, and, in the absence of such an arrangement, an orderly wind down of operations.”
The company said that stores and the company’s U.S. website will remain open as Forever 21 starts winding down operations and seeks a last-minute bidder for its assets. Their website and U.S. stores will remain open, with company officials hoping that a “dual-path process” will “best maximize optionality and value.” In the event of a successful sale, Forever 21 may opt to pivot to facilitate a transaction.
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