Forever 21 Files for Second Bankruptcy in 6 Years: Clearance Sales, Liquidation of Assets, and Store Closures

Fans of Forever 21 may want to brace themselves for a bit of difficult news: The retailer has, via a March 16 press release, announced that it is exiting the U.S. marketplace as it voluntarily files for Chapter 11 bankruptcy.

F21 OpCo, the operator of American Forever 21 stores and licensee of the Forever 21 brand in the U.S., filed a motion with the United States Bankruptcy Court for the District of Delaware looking for a variety of first-day relief accommodations. This includes approval of “the consensual use of cash collateral to pay employee wages and benefits in the ordinary course of business and otherwise fund operations” while the company navigates the bankruptcy process for the second time in six years.

“Following the conclusion of our strategic review and after careful deliberation, we made the decision to file for chapter 11 to implement a court-supervised marketing process to solicit a going concern transaction, and, in the absence of such an arrangement, an orderly wind down of operations,” F21 OpCo CFO Brad Sell stated in the press release.

“While we have evaluated all options to best position the Company for the future, we have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends. As we move through the process, we will work diligently to minimize the impact on our employees, customers, vendors and other stakeholders,” he added.

The mention of the de minimis exemption is notable, as President Donald Trump attempted to close the loophole earlier this year. That decision was quickly reversed as packages were being significantly delayed at the border, and the exemption was reinstated. A number of Forever 21’s stated competitors — Temu and SHEIN, most notably — benefit greatly from the exemption, which waives standard customs fees and tariffs for shipments worth less than $800, as FOX Business noted.

RCS Real Estate Advisors Tasked With Marketing and Selling Forever 21’s Lease Portfolio in the US

According to a press release shared with RetailWire, RCS Real Estate Advisors has been retained by Forever 21 to market and sell its lease portfolio in the U.S.

“We are incredibly excited to make Forever 21’s retail spaces available, presenting a rare opportunity for brands seeking prime locations in high-traffic areas,” said Ivan Friedman, president and CEO of RCS Real Estate Advisors.

“With a diverse range of store sizes, from flagship-style spaces to more flexible footprints, this could be a once-in-a-lifetime opportunity for retailers to secure premium real estate” he added.

Said portfolio includes around 360 lease locations nationwide, ranging in footprint from 4,000 square feet to 150,000 square feet (with an average size of about 20,000 square feet).

Interested parties will soon be able to consult the RCS website for a complete list of available locations, with full details related to lease terms and property specifics being provided.

Forever 21 Store Closures, Liquidation Sales Already Underway: Gift Cards To Be Accepted Until April 15

Per KTLA, Forever 21 had already initiated liquidation sales of its most drastically underperforming stores (236 in number, termed “Wave 1 locations”) in mid-February, with those stores slated for shuttering during the week of March 30.

The remaining “wave 2 locations,” on the other hand, will close sometime before May 1. Gift cards will continue to be accepted up until April 15.

International stores, as of this writing, remain unaffected concerning store closures.