NEW YORK – Fashion retailer Forever 21 said it filed for protection from creditors under Chapter 11 of the US Bankruptcy Code and planned to restructure its business, closing nearly 200 stores in the United States.
“As part of its restructuring strategy, the Company plans to exit most of its international locations in Asia and Europe, but will continue operations in Mexico and Latin America,” Forever 21 said in a statement.
Los Angeles-based Forever 21 filed for protection from creditors in US Bankruptcy Court for the District of Delaware on Sunday and its Canadian unit also filed for bankruptcy.
In a statement addressed to customers and posted on its website, the retailer said filing for bankruptcy protection “allows Forever 21 to continue to operate its stores as usual, while the Company takes positive steps to reorganize the business so we can return to profitability and refocus on delivering incredible styles and fashion you love for many years to come.”
The retailer’s executive vice president, Linda Chang, said the bankruptcy filing “was an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21.”
The company, which was founded in 1984, said it “obtained $275 million in financing from its existing lenders with JPMorgan Chase Bank, N.A. as agent, as well as $75 million in new capital from TPG Sixth Street Partners, and certain of its affiliated funds.”
“The financing provided by JPMorgan and TPG Sixth Street Partners will arm Forever 21 with the capital necessary to effect critical changes in the U.S. and abroad to revitalize our brand and fuel our growth, allowing us to meet our ongoing obligations to customers, vendors and employees. With support from our key landlord and vendor constituents, we are confident we will emerge as a stronger, more competitive enterprise that is better positioned to prosper for years to come, and we remain committed to delivering the fast fashion trends that our customers have come to expect from Forever 21,” Chang said.
The retailer said it “intends to operate in a business as usual manner, honoring all Company policies, including gift cards, returns, exchanges, reimbursement and sale purchases.”
Forever 21 is just the latest mall-based retailer to experience problems amid changing consumer tastes and a shift to online shopping.