Forever 21 Files for Chapter 11 Bankruptcy: A Look at the Retail Giant’s Turmoil
Forever 21, a well-known name in the fast fashion industry celebrated for its chic yet budget-friendly apparel, officially filed for Chapter 11 bankruptcy on March 16, 2025. This development came amid impending store closures, raising concerns about the retailer’s future viability. According to a report from CNBC, the filing signals a potential liquidation of the brand, as it struggled to secure a buyer for its 350 locations across the United States. Despite the challenges, Forever 21’s intellectual property remains under the ownership of Authentic Brands Group.
Shaquille O’Neal’s Stake in Forever 21
Among the notable owners of Authentic Brands Group is former NBA star Shaquille O’Neal. His significant stake in ABG means he also shares ownership of Forever 21 along with other illustrious brands, including Barneys New York, JCPenney, Reebok, Vince, and Hunter Boots. Shaquille O’Neal attained a majority share in ABG following its acquisition of the naming and image rights associated with his personal brand.
A Troubling History: Previous Bankruptcy Filing
This is not Forever 21’s first encounter with bankruptcy; the brand previously filed for Chapter 11 protection in 2019. During that time, the company announced a strategy to exit many international markets in Asia and Europe while still maintaining its presence in Latin America and Mexico. Just four months later, it orchestrated a deal to sell its business.
Understanding Chapter 11 Bankruptcy
Chapter 11 bankruptcy provides U.S. corporations with an opportunity to reorganize while temporarily alleviating their obligations to creditors. In 2020, court documents revealed that Forever 21 sold its assets to Authentic Brands Group, Brookfield Property Partners, and Simon Property Group, with ABG and SPG acquiring a combined 62.5% stake while Brookfield retained 25%.
“We Have Been Unable to Find a Sustainable Path Forward”
Forever 21 was founded by Do Won Chang and Jin Sook in 1981 upon immigrating to Los Angeles from South Korea. Initially branded as ‘Fashion 21,’ the first store opened in 1984. By July 2023, reports indicated that the couple achieved approximately $700,000 in revenue in their inaugural year, allowing them to expand and open a new location every six months.
Addressing the current bankruptcy filing, CFO Brad Sell commented:
“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.”
The de minimis exemption refers to a threshold where imported goods valued below $800 are not subject to customs duties, dramatically affecting pricing strategies for retailers.
Future Prospects
According to Forever 21’s statement, there is a glimmer of hope for a different outcome:
“In the event of a successful sale, the Company may pivot away from a full wind-down of operations.”
Furthermore, as noted by CNBC, Forever 21’s bankruptcy filing estimates its assets to be between $100 million to $500 million, with liabilities ranging from $1 billion to $5 billion and a reported number of creditors between 10,001 and 25,000. Interestingly, the brand’s e-commerce operations and its locations outside the U.S., which are managed by different license holders, will remain unaffected by the Chapter 11 filing.
For further details on the evolving situation surrounding Forever 21 and its implications within the fast fashion sector, please refer to this source.