Forever 21 Files For Bankruptcy

Forever 21, Inc. has filed for bankruptcy and its U.S. subsidiaries have filed voluntary Chapter 11 cases in the U.S. Bankruptcy Court for the District of Delaware, the retailer said in a late Sunday press release. 

Chapter 11 generally provides for reorganization and usually involves a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.

The company said that in order to facilitate its restructuring, it obtained $275 million in financing from its existing lenders with JPMorgan Chase as the agent, and $75 million in new capital from TPG Sixth Street Partners.

Forever 21 said it intends to use proceedings to facilitate a “global restructuring” that will allow the company to focus on a profitable core part of its operations.

As part of its restructuring strategy, Forever 21 plans to exit most of its international locations in Asia and Europe, but said it will continue operations in Mexico and Latin America.

"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,” Linda Chang, executive vice president of Forever 21, said in a statement. 

Kirkland & Ellis LLP is serving as the company's legal advisor, Alvarez & Marsal as its restructuring advisor and Lazard as its investment banker.

The retailer said its Canadian subsidiary has filed for and was granted protection under the companies' Creditors Arrangement Act by the Ontario Superior Court of Justice in Toronto.

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Photo by bargainmoose via Wikimedia.