Sept. 30 (UPI) — Fast-fashion retailer Forever 21 has filed for Chapter 11 bankruptcy.
The U.S. company said in a statement Sunday that it voluntarily filed for bankruptcy in the District of Delaware to “facilitate a global restructuring” that includes the closing of most of its international locations in Asia and Europe.
It has also requested for a number of its American stores to close, and discussion over which ones will be removed to lessen the number of expensive leases it holds is ongoing.
“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 [U.S.] markets,” the company said in a letter to its customers.
Linda Chang, executive vice president of Forever 21, said filing for bankruptcy “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.”
To facilitate the company’s restructuring and to keep stores running as usual, it said it secured $275 million from JPMorgan Chase and $75 million from TPG Sixth Street Partners.
The company also said that its Canadian subsidiary was granted protection from creditors under the Companies’ Creditors Arrangement Act by the Ontario Superior Court of Justice.
“We are confident this is the right path for the long-term health of our business,” the company said. “Forever 21 will be a stronger, more viable company that is better positioned to prosper for years to come.”
News of Forever 21’s Chapter 11 filing comes as big-name brands known for occupying thousands of expensive mall retail feet have struggled as more customers turn online for shopping.
According to retail and technology advisory firm Coresight Research’s Sept. 20 weekly tally, more than 8,560 U.S. retail stores have closed shop in 2019 while estimating that some 12,000 could be shuttered by the end of the year. Only 5,844 U.S. stores closed for all of 2018.