Fashion retailer Forever 21 Inc said it has filed for Chapter 11 bankruptcy protection in the United States to restructure its business, joining a growing list of brick-and-mortar players who have taken a hit from fierce e-commerce competition.
The retailer said it received $275m in financing from its existing lenders with JPMorgan Chase Bank as agent, $75m in new capital from TPG Sixth Street Partners, and certain of its affiliated funds.
It lists assets and liabilities in the range of $1bn to $10bn, according to the court filing in the US Bankruptcy Court for the District of Delaware.
Since the start of 2017, more than 20 US retailers, including Sears Holdings Corp and Toys ‘R’ Us, have filed for bankruptcy, succumbing to the onslaught of fierce e-commerce competition from Amazon Inc.
The Chapter 11 filing allows the Los Angeles-based company to keep operating while it works out a plan to pay its creditors and turn the business around.
“Filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future,” Forever 21 said in a letter to its customers on Sunday.
The group added that it has requested approval to close a number of its stores across the US, although the decision as to which stores will be closed are ongoing.
The bankruptcy filing could be problematic for major mall owners in the US such as Simon Property Group Inc and Brookfield Property Partners LP, which count Forever 21 as their biggest mall tenants.
Forever 21 was founded in 1984 by Korean couple Do Won Chang and Chin Sook Chang, whose daughters now help run the company and more than 800 of its stores worldwide.
Do Won Chang has focused on maintaining a controlling stake in the retail company, which has hindered efforts to raise new funds.