Forever 21, is one of the most liked clothing brands, specifically amongst teenagers. It is a teenage clothing brand that rode American malls boom and bust. Recently on Sunday the brand is filed for Chapter 11 bankruptcy. According to the chain they are planning to mend its overall global business. Reportedly, chain is closing approximately 200 stores, in the United States and planning to exit most of its international locations those are in Europe and Asia. However, company is planning to operate continuously in Mexico and Latin America. The brand has a total of 800 stores across the globe.
The company added that significant number of stores in USA will remain opened and continue to operate as usual. Further, the brand is not planning to leave any major market in the United States. The knack to get out of agreements and close stores at a lower cost is a benefit that the bankruptcy procedure affords to retailers. Executive vice president for the company, Linda Chang, stated in a news release that filing for Chapter 11 was a vital and required step to secure the future of the Company. This step will enable the brand to reorganize its business and reposition its brand value again as Forever 21.
Forever 21 added that it had obtained financing of $275 million from JPMorgan Chase and $75 million capital from TPG Sixth Street Partners. These investments would permit the company to operate its business in as usual manner during overhauling. Further, the brand’s Canadian subsidiary has also granted protection from the creditors. American Apparel, Wet Seal, and Delia’s filed for bankruptcy as well as they even closed all their stores in the last five years. The brand Aeropostale also filed for bankruptcy in the year 2016 although it kept few of its stores open. Company Charlotte Russe also filed for bankruptcy this year. Numerous retailers suffer after being acquired by private equity firms, which piled on debt. In contrary, Forever 21 is still owned by its founders.