Popular for its trendy and affordable clothing, fast fashion retailer Forever 21 filed for Chapter 11 bankruptcy on March 16, 2025, ahead of store closures. As per CNBC's report dated March 17, 2025, the bankruptcy could indicate a possible liquidation for the brand as it was unable to find a buyer for its 350 stores across the U.S. However, the fast fashion retailer's intellectual property and trademark remain under Authentic Brands Group.
Former NBA player Shaquille O'Neal is a major stakeholder in the Authentic Brands Group, making him one of the owners of Forever 21 in addition to other ABG-owned brands, such as Barneys New York, JCPenney, Reebok, Barneys New York, Vince, JCPenney, and Hunter Boots. Shaq acquired a majority of the shares in AGB when the company bought the name and image rights to his name brand.
This is not the first time Forever 21 has filed for bankruptcy, given that the brand filed for Chapter 11 bankruptcy protection in 2019, citing that it planned to "exit most international locations in Asia and Europe" while continuing its operations in Latin America and Mexico. 4 months after filing for bankruptcy, the retailer entered a deal to sell its business.
Chapter 11 protection allows for a U.S. company to postpone obligations to its creditors and reorganize its debts.
As per February 2020 court filings, the clothing brand sold its assets to Authentic Brands Group as well as Brookfield Property Partners and Simon Property Group. In this deal, ABG and SPG own 37.5% and the remaining 25% is held by Brookfield.
"We have been unable to find a sustainable path forward": Forever 21's chief financial officer mentions in statement
Forever 21 was founded by couple Do Won Chang and Jin Sook in 1981 after they immigrated to Los Angeles from South Korea. The brand was initially called 'Fashion 21' and its first store was established in 1984. As per Footwear News' report dated July 2023, Do Won Chang and Jin Sook acquired $700,000 in revenue in the first year of launching the clothing brand resulting in a new store being opened every 6 months.
Commenting on Forever 21 filing for bankruptcy, the brand's chief financial officer, Brad Sell mentioned in a statement:
"We've 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."
De minimis exemption is a threshold value of $800, below which imported goods are exempt from customs duties and taxes, allowing for low-value shipments.
The fast fashion retailer's statement also mentioned:
"In the event of a successful sale, the Company may pivot away from a full wind-down of operations,"
Additionally, CNBC's report mentions that Forever 21 listed its estimated assets in the range of $100 million to $500 million in its filing at the bankruptcy court in the District of Delaware. The filing showcases liabilities ranging between $1 billion to $5 billion and creditors in the range of 10,001 to 25,000.
Despite the brand's current condition, Forever 21's e-commerce platforms and shops outside of the U.S., which are operated by other license holders, won't be affected by the Chapter 11 protection filing.
