Fast-fashion retailer Forever 21’s U.S. operating company filed for Chapter 11 bankruptcy on Sunday, marking its second bankruptcy in six years. The retailer has struggled with declining mall traffic and fierce competition from online brands.
This latest filing is expected to result in liquidation, as Forever 21 failed to secure a buyer for its approximately 350 U.S. stores. However, its brand and intellectual property—owned by Authentic Brands Group—may continue in some capacity.
The shift toward e-commerce and the decline of traditional shopping malls have been ongoing challenges for Forever 21. The company previously filed for Chapter 11 in 2019 before being acquired by Sparc, a joint venture between Authentic Brands Group, Simon Property, and Brookfield Asset Management Inc.
Forever 21 announced it will hold liquidation sales while also seeking a court-supervised sale of some or all of its assets. According to its bankruptcy filing in the District of Delaware, the company listed estimated assets between $100 million and $500 million, while liabilities range from $1 billion to $5 billion. It also reported between 10,001 and 25,000 creditors.
If a buyer emerges, Forever 21 could shift from a full liquidation to a potential business continuation. For now, its U.S. stores and website remain operational, and its international locations are unaffected.
Forever 21 is currently owned by Catalyst Brands, which was formed on January 8 through the merger of Sparc Group and JC Penney, both controlled by Simon Property Group. Upon its creation, Catalyst Brands stated it was “exploring strategic options” for Forever 21.
Authentic Brands Group will retain ownership of Forever 21’s trademark and intellectual property, potentially reviving the brand in some form. Last year, Authentic Brands CEO Jamie Salter admitted acquiring Forever 21 was "the biggest mistake I made."
Founded in Los Angeles in 1984 by South Korean immigrants, Forever 21 was once a go-to for young shoppers seeking trendy, affordable fashion. At its peak in 2016, it operated around 800 stores worldwide, with 500 in the U.S.