Seems like ‘Forever’ was not enough.
Just last month ago, rumours were swirling that fast fashion retailer Forever 21 was preparing for a potential bankruptcy filing.
The company was reported to have been “in talks for additional financing and is working with a team of advisers to help restructure its debt, but negotiations with possible lenders have so far stalled”.
Then, Forever 21 was also reported to be “looking to secure a potential debtor-in-possession loan to take the company into Chapter 11, even as some window remains to strike a last-minute deal”.
‘Chapter 11’ refers to a chapter of the Bankruptcy Code that “provides for reorganisation, usually involving a corporation or partnership”.
A debtor would propose a plan of reorganisation to keep the business alive and pay creditors over time.
Today, a report comes that Forever 21 has indeed filed for bankruptcy protection in the Bankruptcy Court for the District of Delaware.
The court papers show Forever 21 estimating “liabilities on a consolidated basis of between US$1 billion and US$10 billion”.
Forever 21 is said to have obtained US$275 million from lenders with JPMorgan, Chase & Co. as agent, and US$75 million in new capital from TPG Sixth Street Partners and its affiliated funds.
Said Linda Chang, executive vice president of Forever 21 in a statement: “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 revitalise our brand and fuel our growth, allowing us to meet our ongoing obligations to customers, vendors and employees.”
There is hope, however, that the bankruptcy filing could help the troubled fast fashion retailer “get rid of unprofitable stores and raise fresh funds”.
Currently, the chain has around 790 stores in 48 countries around the world, and is worth US$4 billion.