Ukraine receives international financial support to combat the economic consequences of the COVID-19 pandemic.

Forever 21 files for bankruptcy

The American company Forever 21 has filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code on Sunday, marking its second bankruptcy in six years.

Forever 21 OpCo made this move after the retailer, once known for its affordable and trendy clothes aimed at teenagers and young adults, failed to find a buyer for its approximately 350 stores in the U.S.

Noting that most of the stores are located in shopping malls, the retailer states that its operations have been hampered by a decline in foot traffic and increased competition from online retailers.

Some of the biggest competitors for the company in e-commerce are Amazon, Shein, and Temu.

Forever 21 likely to close remaining stores with second bankruptcy

Forever 21 was founded in Los Angeles in 1984 by Korean immigrants. In 2016, the company had around 800 stores worldwide, 500 of which were in the U.S.

This clothing chain has faced challenges since its first bankruptcy in September 2019, during which it closed more than 150 of its 534 stores and sold the rest.

Fast Fashion Forever 21 unable to satisfy millennial demands

Currently, Forever 21 OpCo is owned by Catalyst Brands, formed on January 8 through a merger of Forever 21's former owner - Sparc Group - and JC Penney, a chain owned by mall operators and Simon Property Group, owners of shopping malls since 2020.

Forever 21 files for bankruptcy protection

Last month, when news of impending bankruptcy surfaced, a source familiar with the situation told Bloomberg that the company was preparing to close at least 200 of its remaining 350 stores as part of the bankruptcy process.

According to Reuters, Forever 21 OpCo plans to conduct sales of its stores while in the process of selling and marketing under court supervision regarding some or all of its assets.

Competition from Shein and Temu accelerated store closures

Stores and the website in the U.S. will remain open to serve customers, and international stores will not be affected.

In a statement obtained from Reuters, the company indicated that its estimated assets range from $100 million to $500 million, while liabilities range from $1 billion to $10 billion. The statement shows that the company has between 10,001 and 25,000 creditors.

If the sale is successful, Forever 21 may avoid a complete shutdown to facilitate a sale maneuver.

The brand and intellectual property of Forever 21 are owned by Authentic Brands. Authentic will continue to control the brand, which may exist in some form. Authentic Brands CEO Jamie Salter said last year that acquiring Forever 21 was 'the biggest mistake I made.'

'Forever 21 is one of the most recognizable names in fast fashion. It is a global brand based in the U.S., with future prospects. Retail is changing, and like many other brands, Forever 21 is adapting to strike the right balance between physical stores, e-commerce, and wholesale trade,' said Authentic Brands Group's global president of lifestyle, Jarrod Weber, in a statement to FOX Business.