Fashion retailer Forever 21 has filed for bankruptcy a second time on Sunday. The retailer’s operating company is expected to cease all operations in the U.S. and has already begun liquidation sales at its more than 350 locations, but it’s still open for bids if a buyer is willing to take on its inventory and keep running its stores, according to court filings.
Forever 21 has been seeking a buyer for several months and has contacted more than 200 potential bidders, 30 of which signed confidentiality agreements, but no viable deal has come together. According to CNBC, the company was in talks with liquidators, and would have a hard time finding a buyer for its business. This comes six years after it emerged from its first filing, however it was faced with several other challenges, including the COVID-19 pandemic, and stiff competition from newer fast-fashion brands like Shein and Temu.
Stephen Coulombe, the operating company’s co-chief restructuring officer said in a court-filing that Forever 21 was “materially and negatively impacted” by Shein and Temu’s use of the de minimis exemption, which “undercut” its business. The exemption is a trade law loophole that has historically allowed goods valued under $800 to be shipped into the U.S. without import duties. President Donald Trump is planning to end this exemption.
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“Certain non-U.S. online retailers that compete with the debtors, such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers,” Coulombe wrote. “Consequently, retailers that must pay duties and tariffs to purchase product for their stores and warehouses in the United States, such as the company [Forever 21], have been undercut.”
F21 OpCo is planning for liquidation sales at its U.S. stores, while it goes through a court-supervised sale and marketing process for its assets, which it estimated to be worth around $100 million to $500 million. While its U.S. stores and website would remain open throughout the process, international stores would remain unaffected.
Forever 21 isn’t the only fast fashion company facing challenges. The profits of its competitor Shein have also dropped by more than a third in 2024.