Forever 21 plans to file for bankruptcy: report
The teen retailer, which has three locations in downtown Chicago, has over 800 stores, many in undesirable malls.
Another women’s clothing store chain is reportedly close to filing for bankruptcy protection.
Teen retailer Forever 21 Inc. is preparing for a potential filing as its turnaround options fade, Bloomberg reported Wednesday, citing people with knowledge of the plans.
According to Bloomberg, Forever 21 hired a team of advisers to help restructure its debt and has been in talks for additional financing, but negotiations with possible lenders have stalled,
Forever 21 did not immediately respond to USA TODAY’s request for comment.
Filing for Chapter 11 bankruptcy protection often involves some store closures as retailers look to break leases on money-losing stores and slash loans. The goal is typically to create a reorganized, often-smaller company that can get a new start.
Eric Snyder, a partner at New York-based law firm Wilk Auslander, said the immediate issue is with word of the bankruptcy leaking out credit will dry up until they secure a debtor-in-possession financing.
“With 815 stores, many in undesirable malls, a bankruptcy filing gives Forever 21 the leverage to either renegotiate rents, which landlords are more than willing to do in this retail environment, or reject leases and free itself of liability for unprofitable stores,” said Snyder, who is chairman of the firm’s bankruptcy department.
There has been a wave of recent bankruptcies and store closing announcements.
Earlier this month, luxury retailer Barneys New York announced it is filing for bankruptcy and that it would close 15 of its 22 locations.
Plus-size retailer the Avenue filed for Chapter 11 Aug. 16 and will close its 222 locations.
In July, jewelry and accessories retailer Charming Charlie filed and announced it will close its 261 stores.
Read more at USAToday.com.