Fast-fashion retailer Forever 21 files for bankruptcy for 2nd time
What's the story
Forever 21, a major player in the fast-fashion industry, has filed for Chapter 11 bankruptcy again. This is its second such filing in six years.
The company's US operating entity filed for the same yesterday amid declining mall visits and stiff competition from online retailers.
Its future remains uncertain as no buyer has been found yet for its roughly 350 US stores.
Market changes
Impact of e-commerce and mall decline
The growth of e-commerce and the fall of American mega malls have greatly affected Forever 21's business.
The company had last sought Chapter 11 protection in 2019, when it was purchased by Sparc—a partnership between Authentic Brands Group (ABG) and Simon Property Group and Brookfield Asset Management Inc.
Despite the hurdles, Forever 21 intends to continue its US operations while seeking a court-supervised sale of some or all of its assets.
Bankruptcy details
Financial status and future plans
According to a filing with the District of Delaware's bankruptcy court, Forever 21's estimated assets range between $100 million and $500 million.
Its liabilities, however, are much higher—estimated to be between $1 billion and $10 billion.
The company has between 10,001 and 25,000 creditors. Despite these financial difficulties, Forever 21 has assured customers that its US stores as well as website will remain operational. Also, its international outlets will not be affected.
Brand ownership
Ownership and future of Forever 21
Forever 21 is now owned by Catalyst Brands, which was formed on January 8 from the merger of Sparc Group and JC Penney—a department store chain owned by mall operators, including Simon Property Group.
Despite the bankruptcy filing, ABG will continue to own Forever 21's trademark and intellectual property. This could potentially allow the brand to continue in some form even after liquidation.