US fashion retailer Forever 21 has filed for Chapter 11 bankruptcy protection and has announced plans to exit international markets in Asia and Europe.
A Chapter 11 bankruptcy, similar to that of a Company Voluntary Agreement (CVA) in the UK, postpones a US company’s obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.
A spokesperson for the company revealed it expects to close up to 350 stores globally, including up to as many as 178 US stores. It currently operates 815 stores in 57 countries, including eight stores in the UK. The retailer added that it expects to have a store estate of between 450 and 500 stores by the end of the closures.
The firm added, as part of the Chapter 11 filing, it had obtained $275m (£224m) in financing from existing lenders and $75m (£60m) in new capital.
In a letter to customers posted on its website forever 21 said: “As part of our filing, we have requested approval to close a number of stores across the U.S. The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords.
“We are confident this is the right path for the long-term health of our business. Once we complete a reorganisation, Forever 21 will be a stronger, more viable company that is better positioned to prosper for years to come. We look forward to continuing to provide you with the great service and curated assortment of merchandise that you expect from us.”
Linda Chang, the company’s executive vice president, said in a statement to the New York Times: “This was an important and necessary step to secure the future of our Company, which will enable us to reorganise our business and reposition Forever 21.”