Forever 21, a well-known clothing brand, began voluntary bankruptcy proceedings in the United States on Monday. At the same time, they also announced a plan for the orderly liquidation of their US stores while exploring a possible sale of their assets.
F21 OpCo LLC, which is the brand's operator in the US, said it would hold liquidation sales at stores while also conducting a court-supervised sale for some or all of its assets.
This is the second time Forever 21 has declared Chapter 11 bankruptcy in six years, after their 2019 filing resulted in a reduction in their stores.
According to the company's website, they currently have 540 stores.
The company clarified that its American storeswillremain open and will continue to serve customers during the liquidation process. Stores outside the US, which are operated by other licensees, are not included in the bankruptcy plan.
Founded in 1984 in Los Angeles by Do Won and Jin Sook Chang, Forever 21 became popular in shopping malls in the US for its low-cost clothing copied from high-fashion brands.I
According to Neil Saunders of GlobalData, the company was affected by the weak apparel market and intense competition from cheap Chinese marketplaces.
Saunders added that the company also had problems due to their poor merchandisingand lack of a clear brand identity, which is why younger customers gradually lost interest.
There is a possibility that the brand will continue to be available online through a licensing sale, but this will be paid for at a price that is in line with the brand's current reduced value.
