Last Sunday on September 29th Forever 21 officially filed for Chapter 11 protection, and is hurting for cash which is evident as they had not paid rent on a host of their stores, and in city malls. They announced that they will be closing over 300 locations overseas, and about 178 stores in the U.S. but plan to still operate stores in Latin America and Mexico.
Known for their fast fashion knock-offs of the latest designer styles from the runway, young shoppers are turning their back on the disposable cheap garments (which only lasts for a couple of wears) that they say are a danger to the environment.
On Sunday night the company released a letter to customers stating they have not yet decided which U.S. stores they will close as of yet, as they wait for the outcome from negotiations with landlords. “We do however expect a significant number of these stores will remain open and operate as usual, and we do not expect to exit any major markets in the US”.
In a news release the executive vice president of forever 21 Linda Chang said that filing for Bankruptcy protection “an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21.”
Forever 21 has stated that they have secured about $275 million in financing from JPMorgan Chase and additional capital from TPG Sixth Street Partners in the amount of $75 million to continue to operate normally while restructuring. The company’s Canadian subsidiary is also covered under the bankruptcy protection.
The failing fashion brand has also released a list of the stores that could close under the bankruptcy. According to court records filed on Tuesday, it may be possible for all of the 178 U.S. Stores to remain in operation.
On Sunday Forever 21 said this to it’s customers: “Once we complete a reorganization, Forever 21 will be a stronger, more viable company that is better positioned to prosper for years to come. We look forward to continuing to provide you with the great service and curated assortment of merchandise that you expect from us.” According to Business Insider.
Husband and Wife team Jin Sook & Do Won Chang founded the company in 1984 after emigrating to Los Angeles from South Korea prior in 1981. When they first opened the company it was originally called “Fashion 21” and their first store made $700,000 in sales in the first year of opening.