Fast Fashion Giant Forever 21 Reappointment Consultant To Avoid Bankruptcy Filing

According to sources, the US fashion giant Forever 21 has hired a restructuring consultant, hoping to avoid filing bankruptcy protection.

According to people familiar with the matter, Forever 21 has hired a restructuring consultant to help negotiate with creditors, hoping to improve the company's management by closing stores and loans, and avoid filing bankruptcy protection applications.

Forever 21 used the loans originally purchased from J.P. Morgan chase bank to make up for the company's losses. In addition, they commissioned Latham & Watkins LLP and Alvarez & Marshall to negotiate with the owners of the group stores to reduce rent.

Bloomberg has previously reported that Forever 21 currently has about $500 million of assets based first-lien asset-based revolver, which will expire in 2022.

Earlier this month, it was reported that Forever 21 plans to seek bankruptcy protection and discuss with Management Apollo Global Management, an investment management company, to invest in DIP financing for bankruptcy reorganization, so as to get sufficient financial support.

Forever 21 was founded by Zhang Dongwen, a Korean American couple (Do Won Chang) and Zhang Jinshu (Jin Sook Chang) in 1984, and is headquartered in Losangeles, formerly known as Fashion 21. It was originally a clothing store with an area of only 84 square meters.

Because of its fashionable style and fast speed, it has been popular among young consumers. After a period of rapid development, it has become the fifth largest clothing retailer in the United States. Its footprint is spread over Asia, Europe and the Americas, and its business range extends from women's clothing to men's wear, ornaments, shoes and large size clothing. The company is still privately owned by the founder family. Its annual sales in 2014 were $3 billion 800 million, and sales in 2017 were estimated to be $3 billion 400 million according to Forbes.

At present, Forever 21 has more than 700 stores in the world, but the rise of the electricity supplier has caused a serious impact on them, and sales have been declining in recent years. At the same time, their performance in the international market is also very bad. The huge international retail network has become a serious burden on the company. In January of this year, Forever 21 announced the closure of all its physical stores in China and completely withdrew from the Chinese market.

The instability of retail environment seems to have a huge impact on young fashion brands. In recent years, many American youth brands have declared bankruptcy.