Forever 21 has filed for bankruptcy for the second time and has announced a wind-down of its operations in the United States, facing stiff competition from fast-fashion brands such as Shein and Temu. The move underscores the pressure on traditional, mall-based retailers as consumers increasingly favor online shopping and aggressive pricing from digital-native labels. As the case unfolds, suppliers and workers watch closely for how the company will restructure and what will remain of its footprint in the US market.
F21 OpCo, the operator of Forever 21 stores in the United States, announced on Monday that it had voluntarily filed for bankruptcy protection in a Delaware court and said it would carry out an “orderly wind-down” of its US operations. The filing activates the Chapter 11 process, a path that allows the brand to reorganize while continuing limited operations and seeking to preserve value for creditors. The outcome will depend on court-approved plans and potential asset sales as the company weighs its options.
Nevertheless, the company left open the possibility of being acquired by another firm and of selling some or all of its assets to continue operating. This stance signals that management is exploring all routes to keep the brand alive in some form, even as store closures and inventory assessments proceed across the country.
Court documents reported by US media show that Forever 21 has approached more than 200 potential buyers in recent months but has not closed any deal. The broad outreach illustrates the brand’s effort to salvage value through a sale, recapitalization, or licensing arrangement, though a satisfactory agreement remains elusive.
Stephen Colulombe, co-head of the brand’s restructuring, said in a court filing that the brand was “negatively affected” by the de minimis exemption allowing shipments to the United States of goods valued under 800 dollars to enter without duties, a provision that has been tapped by rivals such as Shein and Temu. This dynamic is shaping the competitive landscape and pressuring traditional retailers facing inexpensive imports.
US policymakers have signaled plans to end this exemption for shipments from China, a move that has drawn scrutiny in recent years amid the rapid growth of Chinese e-commerce with platforms such as AliExpress, Temu, and Shein. The discussion centers on balancing consumer access to affordable goods with protections for domestic brands and the logistics of cross-border trade.
In 2019, Forever 21 filed for bankruptcy for the first time to pursue a global restructuring that included closing stores in the United States and retreating from Asia and Europe, but was later acquired by Sparc Group. The current filing echoes that upheaval while presenting new questions about the brand’s ability to rebound in a highly competitive market.
According to CNBC, Forever 21’s international stores and its website are expected to continue operating, and the brand’s intellectual property is not for sale. The emphasis on ongoing global operations suggests that, while the US footprint is shrinking, the Forever 21 brand could maintain a presence in other markets as the bankruptcy process unfolds, with potential moves that protect legacy lines and licensing opportunities.