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Home » Retail » Forever 21 may soon file for bankruptcy

Forever 21 may soon file for bankruptcy

Al Restar by Al Restar
August 29, 2019
in Retail
2 min read
40
0
Forever 21 may soon file for bankruptcy

Photo: Mike Mozart | Flickr | CC BY 2.0

With more than 800 stores across the U.S., Europe, Asia, and Latin America, Forever 21 is exploring the option of filing for bankruptcy as the financial situation of the company remains unresolved. The company weighs in the option as efforts to restructure its debt run dry, a person familiar with the plan said. 

For the recent years, the apparel line has been exploring different restructuring options to keep their business afloat, but a person familiar with the matter said that these options are stalled, forcing the company to consider filing for bankruptcy in order to pull the company back up. 

Rumors have been surfacing that Forever 21 has begun to raise a so-called debtor-in-possession loan in order to fund the potential bankruptcy filing. However, it is still unclear if there is validity to this rumor. 

One reason for the potential bankruptcy filing, said experts, is the fact that the real estate footprint of Forever 21 huge. Much like any other apparel retailers, the company is leasing in malls and shopping centers. The bankruptcy filing, they said, would release the company from the lease agreements they entered in the past. 

These closures, if ever that’s the result of the bankruptcy filing, would also heavily impact lessors as Forever 21 is one of the biggest tenants in different malls and shopping centers. The fear of Forever 21 closing down some of their 815 stores globally impacts mall owners like  Simon Property Group and Brookfield Property Partners.

This is probably the reason why a faction of Forever 21 employees have been in discussion with mall owners and real estate giants to have a stake in the company, amid the opposition of the company’s Co-founder Do Won Chang. 

Chang has since been focused on mainting the exclusive stake on Forever 21 and has opposed the plan of having other entities taking a stake in the company, amid having limited fundraising options.

Al Restar

Al Restar

An idealist straight from business school who works as a content marketer, digital branding consultant, and graphic designer. Outside work, he spends his time taking care of his cacti and painting watercolors.

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