New York – Forever 21, Inc. announced Sunday it has voluntarily filed for bankruptcy protection under Chapter 11. The fast fashion company broke the news to its customers first, via a letter on their website where they reassure them “this doesn’t mean that we are going out of business.”
“This was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21,” said in a corporate release Linda Chang, executive vice president of Forever 21, Inc.
In a letter to their customers, published to their commercial website, the fast-fashion stated that this move “does NOT mean that we are going out of business – on the contrary, filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future.”
“The Company enjoys and benefits from decades-long relationships with its vendors, and dozens have already agreed to support Forever 21’s restructuring efforts,” said the company on Sunday.
Existing investors have already shown Forever21 their support. JPMorgan Chase Bank has led an injection of 275 million dollars and TPG Sixth Street Partners and some of its affiliated funds have add another 75 million dollars in new capital.
“The financing provided by JPMorgan and TPG Sixth Street Partners will arm Forever 21 with the capital necessary to effect critical changes in the U.S. and abroad to revitalize our brand and fuel our growth, allowing us to meet our ongoing obligations to customers, vendors and employees. With support from our key landlord and vendor constituents, we are confident we will emerge as a stronger, more competitive enterprise that is better positioned to prosper for years to come, and we remain committed to delivering the fast fashion trends that our customers have come to expect from Forever 21,” further added Chang.
Forever 21 will use these proceedings to optimise its store network “and return to basics”. In this regard, a spokesperson for the retailer said the company has requested approval to close up to 178 of its stores in the U.S. On the same note, Forever 21 plans to exit most of its international locations in Asia and Europe, although it will continue operations in Mexico and Latin America. It does not expect to exit any major markets in the U.S.
Additionally, the retailer is planning to use this new funding to “operate in a business as usual manner, honoring all company policies, including gift cards, returns, exchanges, reimbursement and sale purchases.”