Forever 21 is reportedly preparing to file for bankruptcy, according to Bloomberg.
The fashion chain has been working with financial advisers and talking with lenders as their cash reserves grow smaller.
According to the Bloomberg report, a last-minute effort to restructure the company’s debt may save them from having to file for Chapter 11 bankruptcy. Forever 21 has been facing some serious challenges. The company’s stores are now unprofitable and cash reserves are dwindling. At the moment, there are about 600 Forever 21 stores in the US and additional locations in Asia, Canada, Europe, and South America. If the chain does go bankrupt, it’ll be the latest addition to the list of retailers declaring bankruptcy and filing for Chapter 11 protection.
This recent news doesn’t necessarily mark the end of Forever 21 as the company can still use bankruptcy as an opportunity to shed its less profitable locations and recapitalize. However, Forever 21 is one of the largest mall tenants in the US, so this event in the retail apocalypse will certainly have a negative effect on US malls, regardless of whether Forever 21 survives.
Forever 21 has been around since 1984, but the company has been going through the same struggles as most of the rest of the retail industry. For example, Lord & Taylor, one of the oldest department stores in the US, just closed its iconic New York City location earlier this year. Barneys New York also filed for bankruptcy earlier this year.