The American clothing chain Forever 21 has announced that it is declaring bankruptcy. At the same time, it has filed for protection from creditor claims under Chapter 11 bankruptcy of United States bankruptcy law.
According to "Rzeczpospolita," the company filed for protection from creditor claims under Chapter 11 bankruptcy of United States bankruptcy law.
Bankruptcy and legal protection
Under this procedure, the chain will have time to reorganize its capital structure before it can be required to fulfill its obligations to creditors (for example, owners of retail space).
The company plans to close 178 unprofitable stores in Asia and Europe. According to Reuters, stores in South America and Mexico will continue to operate under the existing rules.
Why the clothing giant is going bankrupt and what it means for the market
The chain also announced that it had managed to secure $275 million in financing from existing creditors and $75 million in new capital to carry out a global restructuring.
This is the only solution to save the company, says Linda Chang, the giant's vice president.
Summary
Forever 21 has declared bankruptcy, seeking protection from creditors under Chapter 11. The company will close 178 unprofitable stores in Asia and Europe, while locations in South America and Mexico will remain open. For restructuring, $275 million from creditors and $75 million in new capital have been allocated.
Vice President Linda Chang emphasizes that this is the only solution to save the company. The case of Forever 21 is part of a broader crisis in traditional clothing retail, which is struggling with growing competition from e-commerce and changing consumer preferences.
