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Forever 21 reportedly mulls bankruptcy filing

By Huw Hughes

29 Aug 2019

American fast-fashion retailer Forever 21 is reportedly mulling a bankruptcy filing.

The company is focusing on securing a debtor-in-possession loan to take it into Chapter 11 bankruptcy, Bloomberg reports, citing people with knowledge of the plans. However, a potential last-minute deal is still speculated to be a possibility.

The retailer has been in talks for additional financing and have been working with advisors in a bid to restructure its debt, but negotiations with potential lenders have so far stalled, the sources said.

If Forever 21 pursues Chapter 11 bankruptcy, it would be able to close unprofitable stores and recapitalise the business, a similar process to a company voluntary arrangement (CVA) in the UK.

In April the company announced plans to back out of the Chinese market by closing its physical stores after having already closed its online Chinese store.

Photo credit: Forever 21, facebook