The U.S. operating company of fast fashion retailer Forever 21 filed for the second bankruptcy in six years Sunday, which is reducing mall traffic and increasing competition through online retailers.
The move could mean liquidation of the company, which was unable to find buyers from about 350 U.S. stores.
The company said its international stores remain unaffected.
Its trademarks and intellectual property rights (still held by an entity called the Real Brand Group) may live in different forms.
The era of big shopping is over
The rise of e-commerce combined with the slow death of large American shopping malls has been a continuous headwind for Forever 21. It previously filed for Chapter 11 in 2019 and was acquired from bankruptcy by Sparc, a joint venture between tag owner Authertic Brands Group and shopping center operator Simon Property Group and Brookfield Asset Management.
Forever 21 said it will conduct liquidation sales in its stores while conducting a court-supervised sales and marketing process for some or all of its assets.
According to the Delaware Bankruptcy Court filing, the company lists its estimated assets range from $100 million to $500 million and its liabilities range from $1 billion to $10 billion. The document also shows creditors a range of 10,001 to 25,000.
If sales are successfully made, Forever 21 says it may go all out from operations to facilitate a ongoing deal.
The company said its stores and websites in the U.S. will remain open and continue to serve customers.
Intellectual property rights can be relied on
Forever 21 is owned by Catalyst Brands, the entity merged on January 8 through former owners of Forever 21, Sparc Group and JC Penney, a department store chain owned by shopping center operators and Simon Property Group.
When the catalyst brand was founded, it said in a statement that it was Forever 21’s “exploration strategic choice.”
Real brands will continue to own the trademarks and intellectual property rights of Forever 21 that may live in some form.
Jamie Salter, CEO of Authentic Brand, said last year that he won 21 forever “I made the biggest mistake”.
Founded in 1984 by Korean immigrants in Los Angeles, Forever 21 is popular among young shoppers for stylish but affordable clothing. By 2016, it operated in about 800 stores worldwide, 500 of which are in the United States.
