Forever 21 is preparing to file for bankruptcy due to the instability of its cash flow and because attempts to save the business have failed, say people with knowledge of these plans.
The company has been in negotiations to obtain additional financing and has worked with a team of advisors to help restructure its debt, but negotiations with creditors have stalled, sources said. For this reason, the company has decided to change the strategy towards the protection of Chapter 11, although there is still some room for a last-minute agreement that will keep you out of court.
A bankruptcy statement would help the company eliminate non-profitable stores and recapitalize the business, sources said, who requested anonymity.
Co-founder Don Won Chang has focused on maintaining a majority shareholding, which limited his financing possibilities.
A fraction of Forever 21 shareholders, without the authorization of Chang, had asked its largest tenants to consider buying a stake in the company.
Founded in 1984, Forever 21 operates more than 800 stores in the United States, Europe, Asia and Latin America.
