Forever 21 may have found themselves in big trouble after Ariana Grande filed a lawsuit against them. The once top fast-fashion retailer has filed for bankruptcy, but their business may be in worst trouble than they thought.
With talks of Forever 21 filing for bankruptcy, the fashion retailer is reportedly preparing to close at least 100 stores as part of a restructuring, according to people with knowledge of the preparations.
The apparel merchant is working on obtaining a financial package that would provide about $75 million for its restructuring in the court process, said the people, who asked not to be named discussing private negotiations.
The plan will consist of a Chapter 11 filing, which would allow the company to keep operating while it works out a way to pay its creditors and turn the business around. Even as these plans firm up, advisers could still strike an agreement that buys the retailer more time before resorting to bankruptcy, the people said.
Founded in 1984, Forever 21 operates more than 800 stores in the U.S., Europe, Asia and Latin America.
Representatives for Los Angeles-based Forever 21 didn’t comment on the preparations, but did refer to a statement released on Wednesday as a response to a Wall Street Journal report that the retailer planned to file for bankruptcy as early as Sunday.
“Forever 21 is not planning to file for bankruptcy on Sunday,” the statement read. “Our stores are open and it is our intention to continue to operate the vast majority of U.S. stores, as well as a smaller amount of international stores, providing customers with great service and the curated assortment of merchandise that they love and expect from Forever 21.”
Bankruptcy protection would help the bargain apparel firm shed unprofitable stores after expanding too far and too fast in recent years, the people said.