Fast-fashion retailer Forever 21 has filed for Chapter 11 bankruptcy for the second time in six years, citing declining mall traffic and fierce competition from online retailers. The U.S. operating company filed for bankruptcy on Sunday, signaling a likely liquidation of its 350 U.S. stores after failing to secure a buyer.
Despite the bankruptcy, Forever 21’s U.S. stores and website will remain operational, while its international outlets remain unaffected. The company will conduct liquidation sales while pursuing a court-supervised sale of some or all of its assets.
Financial Struggles and Bankruptcy Filing
Forever 21 reported:
- Assets valued between $100 million and $500 million
- Liabilities between $1 billion and $10 billion
- Between 10,001 and 25,000 creditors
The company first filed for bankruptcy in 2019 and was later acquired by Sparc Group, a joint venture between Authentic Brands Group, Simon Property Group, and Brookfield Asset Management. However, it struggled to regain momentum as e-commerce dominance and declining mall footfall continued to weigh on the business.
Ownership and Future Prospects
Forever 21 is currently owned by Catalyst Brands, an entity formed in January 2024 through the merger of Sparc Group and JC Penney. The company had previously stated it was exploring strategic options for Forever 21.
Despite the bankruptcy, Authentic Brands Group retains ownership of Forever 21’s trademark and intellectual property, keeping the door open for future licensing deals or brand revivals. CEO Jamie Salter has since called acquiring Forever 21 “the biggest mistake I made.”
The Rise and Fall of Forever 21
Founded in Los Angeles in 1984 by South Korean immigrants, Forever 21 became a favorite among young shoppers for its trendy, affordable clothing. By 2016, it operated 800 stores globally, with 500 locations in the U.S. However, the rise of e-commerce giants and the decline of American malls significantly impacted its sales, leading to its current financial troubles.
As the fast-fashion industry shifts towards digital retail, Forever 21’s future remains uncertain, with a possible sale of its remaining assets or a full liquidation on the horizon.
