The U.S. retail operator of Forever 21, a brand that once attracted droves of young women and girls to shop for cheap, trendy clothing, filed for bankruptcy after years of poor performance.
The company filed for Chapter 11 bankruptcy in Delaware, court documents show. It listed assets of $100 million to $500 million and liabilities of $1 billion to $10 billion in its petition.
It said in a press release it would wind down its US operations while pursuing a going concern transaction or a sale of some or all of its assets.
Forever 21 was considering multiple options to turn around its business, which could include a second bankruptcy filing, Bloomberg reported in February.
It’s the clothing brand’s second stint with bankruptcy. Its first in 2019 was rife with fighting, left creditors little recovery and resulted in the closing of hundreds of locations it had during its heyday. The brand has more than 540 locations globally, according to its website.
A group of buyers — including Simon Property Group, Brookfield Corp. and Authentic Brands — teamed up to buy Forever 21 out of bankruptcy through a venture called Sparc Group. Sparc announced this year it was combining with JCPenney to form Catalyst Brands. At the time of the merger, Catalyst said it was exploring strategic options for the operations of Forever 21.
The company is the latest retailer to stumble amid high inflation as shoppers reduce their clothing budgets. It has also taken a hit as more customers order online instead of going to malls.
Forever 21’s locations outside of the United States are operated by other licensees and aren’t included in the Chapter 11 filings.
With assistance from Reshmi Basu and Eliza Ronalds-Hannon.
