Forever 21 Files for Bankruptcy and Announces It Will Cease Operations

Forever 21 Files for Bankruptcy

Impact on the Retail Sector

Bad News for Many Customers

Fast fashion chain Forever 21 has filed for bankruptcy once again.

It confirmed it will cease operations in the United States amid fierce competition from companies like Shein and Temu.

F21 OpCo, the company that manages the brand’s stores in the U.S., filed for bankruptcy protection in a Delaware court.

It announced it will proceed with an “orderly liquidation” of its U.S. operations.

Forever 21 Confirms What Many Feared

Forever 21 Files for Bankruptcy – Photo: Shutterstock

Despite the decision, the company stated it is open to purchase offers from other businesses, which could allow it to continue operating under new ownership.

According to court documents, Forever 21 reached out to over 200 potential buyers in recent months but failed to finalize a deal.

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Stephen Colulombe, the company’s co-head of restructuring, explained in a court statement that the brand was negatively impacted by the “de minimis” exemption.

This rule allows products valued under $800 to enter the U.S. without paying tariffs, benefiting Chinese competitors like Shein and Temu.

President Donald Trump’s administration has stated its intent to eliminate this exemption to curb the rise of e-commerce imports from China.

Forever 21 had already faced financial troubles in 2019, when it filed for bankruptcy in an attempt at global restructuring.

That move led to the closure of several stores in the U.S. and its withdrawal from Asian and European markets, before being acquired by Sparc Group, which tried to revive the brand.

Despite the U.S. shutdown, the company confirmed its stores in other countries will remain open and its website will continue offering online shopping.

It also clarified that the brand’s intellectual property is not for sale, suggesting there may still be future plans for Forever 21 in the fashion industry.

News of the bankruptcy marks another blow to the U.S. retail sector.

Several traditional brands have struggled to stay afloat in a market increasingly dominated by online shopping.

Forever 21, once an icon of affordable youth fashion, has faced years of decline due to the rise of digital platforms offering lower prices and broader product selections.

Industry analysts point out the company failed to adapt to changing consumer habits, according to El Cronista.

Today’s shoppers prefer to buy clothes via apps and websites with fast shipping and constant deals.

The closure of its U.S. stores will significantly impact employees and commercial landlords, as they lose one of the most recognizable brands in American malls.

It remains to be seen whether an investor will step in to acquire the company’s assets and give Forever 21 a chance to reinvent itself in the fashion market.

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PHOTO: MundoNOW