The company has been looking for financing but talks with lenders haven't been successful so far.

Fashion retailer Forever 21 may head for bankruptcy filing amid cash crunchPhillip Pessar via Flickr (CC BY 2.0)
Money Retail Friday, August 30, 2019 - 10:24
Written by  S. Mahadevan

Popular fashion retailer Forever 21 could be applying for bankruptcy leading to several of its stores being shut down. It has been reported that the company’s cash reserves have been draining fast and its talks for sourcing funds have not borne fruits so far. There appears to be no other options left with the founders at this juncture, except to file for bankruptcy under Chapter 11 in the US. The report adds that there could be some last-ditch efforts to save the company from going the Chapter 11 way.

The one section of stakeholders said to be very worried about this development with Forever 21 would be the landlords and mall owners who are currently hosting the fashion retailer’s stores in their properties. The loss to them in terms of rentals and the prospect of looking for alternate tenants on the properties could be a daunting task. The names of a couple of mall owners have been mentioned in the related report, Simon Property Group Inc. and Brookfield Property Partners LP. It is said these mall owners were banking on Forever 21 particularly since many retailers had vacated the premises they were occupying after filing bankruptcies themselves. This news of Forever 21 also thinking on those lines will come as a shock to them.

There was a report by Bloomberg earlier that some employees of Forever 21 had approached the powerful landlords to consider if they can make some investments in the company to keep it afloat. One of the co-founders is adamant on not liquidating his holding and that might be one of the reasons for the fundraising talks not progressing beyond a certain point.

Forever 21’s 800 retail fashion stores are spread across the US, Europe, Asia and Latin America.

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