EXEC: Another Authentic Licensee Files Bankruptcy as Forever 21 to Close in U.S.

The licensee of fast fashion retailer Forever 21 will wind down its operations in the U.S. while pursuing a going concern transaction or a sale of some or all of its assets, according to a Sunday, March 16 filing in The U.S. Bankruptcy Court for the District of Delaware seeking Chapter 11 protection.

The entities filing the bankruptcy are F21 Opco, the licensee of Forever 21 in the U.S., along with F21 Puerto Rico and F21 GiftCo Management, LLC. The cases are pending joint administration under Case No. 25-10469 before the Honorable Mary F. Walrath.

This is the company’s second filing in six years. First-day filings are scheduled for Tuesday, March 18, 2025.

F21 Opco and “certain of its U.S. subsidiaries” have reportedly entered into a Plan Support Agreement (PSA) with the company’s secured lenders. Through its Chapter 11 cases, the company said it “will implement an orderly wind down of its U.S. business while continuing to conduct a marketing process to solicit interest in a going concern transaction or a sale of some or all of its assets.”

The PSA is designed to enable the company to move through the Chapter 11 process quickly and efficiently. Through the PSA and the Chapter 11 proceedings, the company said it “will conduct liquidation sales at its stores while simultaneously conducting a court‑supervised sale and marketing process for some or all of its assets.”

The company also will file a motion with the Court seeking authority to market F21 OpCo’s assets through an auction pursuant to section 363 of the Bankruptcy Code. In the event of a successful sale, the company may pivot away from a complete wind-down of operations to facilitate a going-concern transaction. The company said it “believes this dual-path process will best maximize optionality and value.”

The company’s Forever 21 stores and website in the United States will remain open and will continue serving customers as the company begins its process of winding down operations.

The company has filed customary motions with the Court seeking various “first-day” relief, including approval of the consensual use of cash collateral to pay employee wages and benefits in the ordinary course of business and otherwise fund operations through the Chapter 11 process.

“Following the conclusion of our strategic review and after careful deliberation, we made the decision to file for Chapter 11 to implement a court-supervised marketing process to solicit a going concern transaction, and, in the absence of such an arrangement, an orderly wind down of operations,” explained Brad Sell, chief financial officer, F21 OpCo.

“While we have evaluated all options to best position the company for the future, we have 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, and evolving consumer trends. As we move through the process, we will work diligently to minimize the impact on our employees, customers, vendors and other stakeholders,” continued Sell.

Forever 21 store locations outside the United States are operated by other licensees and are not included in the Chapter 11 filings.

Authentic Brands Group continues to own the intellectual property associated with the Forever 21 brand and could license the brand to other operators.

The non-U.S. Forever 21 store locations and its international e-commerce sites will continue operating in the ordinary course of business.

Liberated Brands, LLC, the former licensee of the former Boardriders brands owned by Authentic, filed for Chapter 11 in early February.

Authentic Brands Group, which owns Reebok, Spyder, Volcom, Quiksilver, Roxy, DC Shoes, Barneys New York, Aeropostale, Nine West, and other consumer brands, acquired the Forever 21 brand in February 2020. Real estate companies and mall owners Simon Property Group and Brookfield Property Partners were also part of the deal.

“Forever 21 is a powerful retail brand with incredible consumer reach and a wealth of untapped potential,” said Jamie Salter, CEO of Authentic Brands Group, at the time. Forever 21 had 593 stores globally at the time.

Paul, Weiss, Rifkind, Wharton & Garrison LLP and Young Conaway Stargatt & Taylor, LLP are serving as the company’s proposed legal counsel, BRG is serving as the company’s proposed financial advisor and RCS Real Estate Advisors is serving as the company’s proposed real estate advisor. SSG Capital Advisors, LLC is serving as the company’s investment banker, and Reevemark is serving as the company’s communications advisor.

Image courtesy Forever 21