Fashion retailer Forever 21 files for bankruptcy

Fashion retailer Forever 21 files for bankruptcy

The company said it has $275 million in financing from its existing lenders and $75 million in new capital from private equity investors.

Since 2017, more than 20 U.S. retailers including bigwigs like Toys "R" Us have filed for bankruptcy.

Fashion retailer Forever 21 plans to close all 44 of its stores in Canada along with 168 in the U.S.as the chain undergoes bankruptcy proceedings. Brands like ecommerce retailer Fashion Nova and Revolve Group Inc. have cut into Forever 21's customer base while interest among Generation Z and millennials in secondhand and vintage clothing have made fast fashion less appealing.

The company has since shut its three flagship stores in Australia. The retailer now operates around 800 stores globally, the majority of which are in the U.S.

The proposed store closure list was not disclosed.

Retailer Forever 21 became the latets retailer to file for bankruptcy protection. Along with the bankruptcy, Forever 21 plans to close up to 178 doors in the USA, and most of its worldwide locations in Asia and Europe.

Commonly known as a "reorganisation" bankruptcy, the Chapter 11 filing ensures Forever 21 will retain control and possession of its assets while the restructuring is carried out.

He said bankruptcy would result in a much leaner United States business, but he added that most, if not all, stores in Europe would be expected to close.

According to court documents, the business in Canada is "wholly reliant" on its parent company in the USA for operational and financial support.

"The business operations of the brand in India will not be impacted in any way by its restructuring underway in the USA", a company spokesperson said in a response to a query from Mint on Monday.

A corporate spokeswoman for Forever 21 told the Herald on Monday she also had no information on the status of the Tri-Cities store and referred to the company's statement issued this weekend.

The numbers show the crisis facing traditional retailers. According to the New York Times, Forever 21 will close 178 stores in the USA, with the remaining 172 stores being closed located in other countries. The letter, which is addressed to Forever 21's customers, explains the filing in simple terms to let its customers know how a chapter 11 bankruptcy filing will impact its day to day operations as a business. Hundreds of Forever 21 stores are closing too: Somewhere between 300 and 350 Forever 21 store closures will take place in the near future around the world, CNN reported, including up to 178 closures in the U.S.

"However, over the past five years the number of customers has waned as the brand has fallen increasingly out of favour".

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