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Forever 21 files for bankruptcy

Sep 30, 2019 United States
Forever 21 files for bankruptcy
The fast fashion retailer of clothing and accessories filed for Chapter 11 bankruptcy. Forever 21 plans to close most of its stores in Asia and Europe
The Los Angeles-based company has announced that it and its US subsidiaries have commenced voluntary chapter 11 cases in the United States Bankruptcy Court for the District of Delaware. The company also announced that its Canadian subsidiary filed for and was granted protection under the Companies’ Creditors Arrangement Act by the Ontario Superior Court of Justice (Commercial List) in Toronto. Forever 21 intends to use these 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, the Forever 21 plans to exit most of its international locations in Asia and Europe, but will continue operations in Mexico and Latin America.

“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”, commented Linda Chang, Executive Vice President of Forever 21.

The company its making use of decades-long relationships with its vendors, and dozens have already agreed to support Forever 21’s restructuring efforts. To facilitate its restructuring, Forever 21 has obtained 275 million US dollars in financing from its existing lenders with JPMorgan Chase Bank, N.A. as agent, as well as 75 million US dollars in new capital from TPG Sixth Street Partners, and certain of its affiliated funds. With this capital, Forever 21 intends to operate in a business as usual manner and will use these proceedings to right size its store base and return to basics that allowed the company to thrive and grow into the fast fashion leader.

“The financing provided by JPMorgan and TPG Sixth Street Partners will arm Forever 21 with the capital necessary to effect critical changes in the US 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”, Ms. Chang further noted.

Image credits: REUTERS - Shannon Stapleton

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