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Forever 21 Files for Bankruptcy Again Amid Financial Struggles

Forever 21 Files for Bankruptcy Again Amid Financial Struggles
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  • PublishedMarch 17, 2025

Fast-fashion retailer Forever 21 has filed for Chapter 11 bankruptcy in the United States for the second time in six years.

The company, known for its affordable and trendy clothing, has faced mounting financial challenges, including declining mall traffic, increased competition from online retailers, and rising operational costs.

The US operating company of Forever 21 filed for bankruptcy protection in Delaware on Sunday. Court documents show that the company listed its:

  • Assets between $100 million and $500 million
  • Liabilities between $1 billion and $10 billion
  • Creditors ranging from 10,001 to 25,000

The retailer announced that it would begin liquidation sales at its stores while also exploring a court-supervised sale of some or all of its assets.

“In the event of a successful sale, the company may pivot away from a full wind-down of operations,” Forever 21 stated.

For now, the company plans to keep its US stores and website operational, while its international stores, which are run by license-holders, will not be affected by the bankruptcy filing.

This is not Forever 21’s first encounter with financial troubles. The company previously filed for Chapter 11 bankruptcy in 2019, leading to the closure of hundreds of stores. It was later acquired by a joint venture Sparc Group, which included Simon Property Group, Brookfield Corporation, and Authentic Brands Group.

In January 2024, Sparc merged with JCPenney to form Catalyst Brands, which had been exploring strategic options for Forever 21 before the latest bankruptcy filing.

Jamie Salter, CEO of Authentic Brands, previously admitted that acquiring Forever 21 was “the biggest mistake” he made.

Once a dominant player in the fast-fashion industry, Forever 21 has struggled to adapt to changing consumer preferences. The brand gained popularity in the 1990s and 2000s for its low-cost, trendy apparel, but recent years have seen:

  • A shift to online shopping, reducing foot traffic in malls
  • Increased competition from international brands like Zara, H&M, and Shein
  • High inflation, causing consumers to cut back on discretionary spending

Retail analysts point to the declining appeal of brick-and-mortar stores, particularly in shopping malls, where Forever 21 has traditionally operated.

With input from BBC, Reuters, and Bloomberg.