Forever 21’s U.S. operating company filed for Chapter 11 bankruptcy over the weekend and will seek to sell all or some of its assets, according to court documents.
The filing marks the company’s second bankruptcy in six years. The Times reported last month that Forever 21 was preparing to close at least 200 stores and lay off more than 350 employees in its corporate office in downtown Los Angeles.
The retail chain, which has roots in L.A. and was once known for its trendy and inexpensive offerings, will begin an orderly wind-down of its U.S. business while continuing to search for a buyer.
Some stores and the chain’s website will remain open, and locations outside the U.S. will be unaffected.
“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,” said Brad Sell, chief executive of Forever 21’s U.S. operating company, F21 OpCo.
“While we have evaluated all options to best position the Company for the future, we have been unable to find a sustainable path forward,” he said in a statement.
Forever 21 has between $100 million and $500 million in assets and $1 billion and $10 billion in liabilities, according to documents filed with the U.S. Bankruptcy Court in Delaware.
Throughout the bankruptcy process, Authentic Brands Group will retain ownership of Forever 21’s intellectual property and may license the brand to other operators. F21 OpCo is owned by Catalyst Brands.
“Our U.S. licensee’s decision to restructure its operations does not impact Forever 21’s intellectual property or its international business,” Authentic Brands Group global president of lifestyle Jarrod Weber said in a statement.
“Forever 21 is one of the most recognizable names in fast fashion,” he said. “Retail is changing, and like many brands, Forever 21 is adapting.”
Founded by South Korean husband-and-wife team Do Won Chang and Jin Sook Chang in 1984, Forever 21 grew into a prominent name in fashion by the mid-2000s and helped popularize the concept of fast fashion in the U.S.
Fast fashion, which refers to the mass production of cheap clothing, has fallen out of favor with many consumers as it has been linked to waste and climate change.
“It certainly is a factor, especially for the younger generation, that fast fashion has a bit of a black eye,” said Ray Wimer, a professor of retail practice at Syracuse University. Younger shoppers tend to be more concerned about the environment, he said, and are drawn to brands with sustainability initiatives such as H&M and Zara.
Forever 21 also faced heavy competition from online retailers including Shein and Temu and failed to use social media influencers to reach a wider audience, Wimer said. And big box retailers, while not focused entirely on fashion, often sell clothes for unbeatable prices.
“Amazon and Walmart have invested heavily in their apparel sections and offer that at a lower price point,” Wimer said. “Forever 21 couldn’t compete.”
The operating company first filed for bankruptcy in 2019.
If Authentic Brands Group licenses Forever 21’s brand to a new operator, the iconic name could carry on, Wimer said, but the brick-and-mortar locations would probably not survive.