News Release, Forever 21
Forever 21, Inc., (the “Company”) today announced that it and its U.S. subsidiaries have commenced voluntary chapter 11 cases in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).
The Company also announced that its Canadian subsidiary filed for and was granted protection under the Companies’ Creditors Arrangement Act by the Ontario Superior Court of Justice (Commercial List) in Toronto. Forever 21 intends to use these proceedings to facilitate a global restructuring that will allow the Company to focus on a profitable core part of its operations.
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.
“This 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,” Linda Chang, Executive Vice President of Forever 21, Inc., said.
The Company enjoys and benefits from decades-long relationships with its vendors, and dozens have already agreed to support Forever 21’s restructuring efforts.
To facilitate its restructuring, Forever 21 has obtained $275 million in financing from its existing lenders with JPMorgan Chase Bank, N.A. as an agent, as well as $75 million in new capital from TPG Sixth Street Partners, and certain of its affiliated funds. With this capital, Forever 21 intends to operate in a business as usual manner, honoring all Company policies, including gift cards, returns, exchanges, reimbursement and sale purchases.
Forever 21 will use these proceedings to right-size its store base and return to basics that allowed the Company to thrive and grow into the fast fashion leader.
In a letter to customers( In full below) on Sunday night, the company said that decisions about which US stores would close were continuing.
“Forever 21, Inc. voluntarily filed for bankruptcy protection under chapter 11 of the U.S. Bankruptcy Code. Essentially this 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. This does NOT mean that we are going out of business – on the contrary, filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future.
Most importantly, our stores are open and it will continue to feel like a normal day – you will not see any changes in our stores, gift cards will continue to be accepted, and our policies, including returns and exchanges, remain the same.
As part of our filing, we have requested approval to close a number of stores across the U.S. The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations 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 U.S. Please visit our store locator to find the most up to date store list, and of course, you can always find all of your favorite merchandise at www.forever21.com.
We are confident this is the right path for the long-term health of our business. 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.
For questions about products, warranties, or rewards, please continue to contact our Customer Service Department at 1-888-494-3837. If you have questions regarding the Company’s restructuring process, they can visit our restructuring website at https://cases.primeclerk.com/forever21/ or call us at 1-877-510-9565.”