The U.S.-based operating company of fast-fashion retailer Forever 21 on Sunday filed for Chapter 11 bankruptcy again, its second in six years, as it struggles with declining traffic in malls and growing competition from e-commerce companies.
The move means liquidation for the company, named F21 OpCo, which was unable to find a buyer for its roughly 350 U.S. stores. Forever 21's trademark and intellectual property – still held by an entity called Authentic Brands Group – may live on in a different form.
The rise of e-commerce players such as Amazon as well as Shein and Temu, paired with the slow death of the American mega mall, have hurt apparel retailers such as Forever 21 and Bonobos-parent Express, which filed for bankruptcy last year.
Founded in Los Angeles in 1984 by South Korean immigrants, Forever 21 at its height was popular among young shoppers on the prowl for stylish but affordable clothing. By 2016 it was operating around 800 stores globally, with 500 of those in the United States.
"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," said Brad Sell, F21 OpCo's chief financial officer.
De minimis refers to the U.S. waiver of standard customs procedures and tariffs on imported items worth less than $800 that are shipped to individuals.
Forever 21 previously filed for Chapter 11 in 2019 and was bought out of it by Sparc, a joint venture between label owner Authentic Brands Group and mall operators Simon Property and Brookfield Asset Management.
Now, Forever 21 plans liquidation sales at its stores while it goes through a court‑supervised sale and marketing process for some or all of its assets.
Its stores and website in the United States will remain open and continue serving customers, and its international stores remain unaffected.
The company listed its estimated assets in the range of $100 million to $500 million, according to a filing with a bankruptcy court in the District of Delaware, and liabilities in the range of $1 billion to $10 billion. The filing showed creditors in the range of 10,001 to 25,000.
In the event of a successful sale, Forever 21 may pivot away from a full winddown of operations to facilitate a going-concern transaction.
Forever 21 is currently owned by Catalyst Brands, an entity formed on Jan. 8 through the merger of Forever 21's previous owner, Sparc Group, and JC Penney, a department store chain owned since 2020 by mall operators and Simon Property Group.
When Catalyst Brands was formed, it said in a statement that it was "exploring strategic options" for Forever 21.
Authentic Brands will continue to own Forever 21's trademark and intellectual property, which could live on in some form. Authentic Brands CEO Jamie Salter last year called acquiring Forever 21 "the biggest mistake I made."
