LOS ANGELES — F21 OpCo, LLC, the operator of Forever 21 stores and licensee of the brand in the United States, has announced that it and certain U.S. subsidiaries have filed for voluntary Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware. The company has entered into a Plan Support Agreement (PSA) with its secured lenders, initiating an orderly wind-down of its U.S. operations while seeking potential buyers for some or all of its assets.
As part of the Chapter 11 process, Forever 21 plans to conduct liquidation sales at its stores while simultaneously marketing its assets through a court-supervised process. The company has also filed a motion requesting permission to market its assets through an auction under Section 363 of the Bankruptcy Code. Should a buyer emerge, the company may pivot from a complete shutdown to a transition that preserves some operations.
Despite the bankruptcy filing, Forever 21’s physical stores and online platform in the U.S. will remain open during the wind-down process. The company has also sought approval from the court to continue paying employee wages and benefits and to maintain normal business operations during the proceedings.
Chief Financial Officer Brad Sell stated that the decision to file for bankruptcy followed a comprehensive strategic review. He cited rising costs, economic challenges affecting the company’s core customers, increased competition from foreign fast fashion brands, and evolving consumer trends as key factors that led to the filing. The company explored multiple alternatives before determining that a court-supervised sale and wind-down was the best available option.
Sell expressed appreciation for the dedication of Forever 21’s employees and the loyalty of its customers. He emphasized the company’s commitment to minimizing disruptions for stakeholders as it navigates the bankruptcy process.
Forever 21’s international operations, which are managed by independent licensees, are not included in the bankruptcy proceedings. The brand’s intellectual property remains owned by Authentic Brands Group, which may license it to other operators in the future.
The company has made information about the Chapter 11 process available online, including details on court filings and the claims process. Legal and financial advisors, including Paul, Weiss, Rifkind, Wharton & Garrison LLP and BRG, are assisting the company in the proceedings.
Forever 21, once a leader in fast fashion retail, has faced significant challenges in recent years as consumer shopping habits shift and online competitors gain market share. The outcome of the bankruptcy process will determine the company’s future and the potential continuation of the brand under new ownership or business models.
