Forever 21 Files for C11 Bankruptcy

F21 OpCo LLC (Los Angeles), operator of Forever 21 stores and licensee of the Forever 21 brand in the United States, has filed for Chapter 11 bankruptcy. With that action, the company says it will proceed with “an orderly wind down” of its U.S. business, which includes an American headquarters in Los Angeles and 340 stores. (200 other locales outside the U.S. will continue operating by other licensees.)

Meantime, the company say it will continue to seek a buyer to undertake either a going-concern transaction or acquire some or all its assets. If such a sale should take place, the company may pivot away from a full wind down of operations to facilitate a going-concern transaction, a dual-path process will best maximize optionality and value.

“While we have evaluated all options to best position the company for the future, 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 [which allows shipments of goods valued at or under $800 to enter the U.S. duty-free and with minimal paperwork] to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers and evolving consumer trends,” said F21 OpCo CFO Brad Sell. “As we move through the process, we will work diligently to minimize the impact on our employees, customers, vendors and other stakeholders.”

This is Forever 21’s second trip into bankruptcy. In its coverage of the company’s latest foray into Chapter 11, The New York Times noted that its first trip took place in 2019, at which time it closed more than 30 percent of its stores in the United States before being bought out of bankruptcy by the Sparc Group, a joint venture between Authentic Brands Group and mall operator Simon Property Group.

Then, in 2023, Sparc signed an agreement selling Chinese e-commerce giant Shein about a third of Sparc’s shares. But that apparently has not been enough to turn the retailer’s fortunes around.