A SHOPPER has cried out after finding a beloved retailer disorganized amid mass closures.
The chain has had financial struggles in recent years and is rumored to be headed for what would be its second bankruptcy filing.
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Melanie, a local consumer in Lexington, Kentucky, went to her nearest Forever 21 at Fayette Mall to find the fast fashion store in bad shape.
“It’s a crying shame how customers basically trashed the store,” she wrote in a post on Facebook.
“Why do they think it’s okay to just throw merchandise in the air and see where they might land?”
Images included in Melanie’s post showed “store closing” signs and discounts as high as 50% off some merchandise.
Read More on Store Closures
Some pairs of pants and tops could be seen hanging off one another in disarray.
The shuttering location in Kentucky is one of 200 that Forever 21 is closing the doors to nationwide.
SALES STRUGGLES
Each has been underperforming, which experts attribute to decreased foot traffic, reputation damages from labor rights and environmentalist groups, and stiff competition from brands like H&M and Zara.
Forever 21 has even been withholding royalty and rent payments to keep them open.
Sources close to the matter told Bloomberg recently that the company is expected to file for bankruptcy as soon as the end of this month.
Forever 21 first filed for bankruptcy in 2019 and was able to come out with some restructuring, cutting its store count a little from its peak of 500 domestically and 800 internationally.
Customers who frequent the Acadiana Mall in Lafayette, Louisiana, are also losing a Forever 21 store.
Although nothing is set in stone yet.
The retailer is reportedly trying to negotiate several deals with landlords to keep them open longer, per The Acadiana Advocate.
However, if no deal is reached, the stores will continue liquidation sales.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can’t repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.
COMPANY STATEMENT
Catalyst Brands, the operations owner of Forever 21, noted that final decisions as to the future of the brand have not yet been reached.
“Forever 21’s operating company, which is the brand licensee in the US, continues to explore strategic options, including a potential sale, while also reducing costs and optimizing its store footprint,” the company told Bloomberg.
“The efforts are ongoing and no final decisions regarding the outcome of the process have been made.”
Catalyst Brands has several shareholders backing it, including Authentic Brands, Brookfield Corporation, Shein, and Simon Property Group.
Authentic Brands specifically owns the intellectual property and trademarks, licensing them to US operator F21 OpCo.
Even if Catalyst Brands goes through with the bankruptcy, Authentic brands can still license Forever 21’s name to other companies and distributors.
Other fashion retailers have also filed for bankruptcy recently.
Express submitted its Chapter 11 filing in April 2024 and proceeded to shutter over 100 stores nationwide.
Rue21 also filed for bankruptcy a second time in May of the same year, and closed 540 locations.
