Forever 21 Files For Bankruptcy: Will Stores Close For Good?

According to Axios, the company operates 354 stores and has over 9,200 employees as F21 OpCo LLC, which operates all Forever 21 stores in the U.S.

Here’s everything consumers need to know about Forever 21’s latest bankruptcy filing and how it signals the end of an era for mall shoppers.

Who owns the Forever 21 brand?

Forever 21 is owned by Catalyst Brands, which was formed on Jan. 8 through the merger of Sparc Group, the store chain’s previous owner, and JCPenny. The company also oversees beloved mall staples like Aéropostale, Brooks Brothers, Eddie Bauer, Lucky Brand, and Nautica, according to a news release.

Catalyst Brands said it was “exploring strategic options for the operations of Forever 21.”

The parent company hopes to find a buyer for the business or part of its assets in a deal that could save the brand and its stores nationwide from permanently closing.

Filing for bankruptcy is different this time

Forever 21 initially filed for Chapter 11 bankruptcy in 2019. Now, filing for a second time in six years, the company has failed to maintain sales as customer traffic to malls has declined as the brand competes with Chinese fast fashion brands like Temu and Shein, Fox 32 Chicago reported.

The company filed for bankruptcy Sunday. Previously, in February, Forever 21 announced the layoff of 358 workers from its corporate office as the company also braced for store closings across the country, per USA Today.

“While we have evaluated all options to best position the company for the future, we have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin,” Chief Financial Officer Brad Sell said in a statement obtained by The Associated Press.

How much did Forever 21 owe in debt?

Reuters reported that Forever 21 filed for bankruptcy, with more than $1.58 billion in debt after losing more than $400 million in the last three years. “It lost $150 million in 2024 alone, and was projected to lose approximately $180 million in 2025,” according to court documents filed in a Wilmington, Delaware, bankruptcy court.

“Brick-and-mortar retailers like Forever 21 operate in a highly competitive environment where the cost of doing business is expensive and rising with inflation rates,” Sarah Foss, head of legal and restructuring at Debtwire, told Reuters.

Forever 21 was founded in Los Angeles 1984 by Korean immigrants, and since then, it became a fashion staple for teenagers and young people in malls nationwide, per Reuters.

So, are all Forever 21 stores closing and will the company seek a new owner?

Many reports indicated earlier on Monday that all stores would shutter. ABC News reported that U.S. locations will stay open for now at least, stating in an article that the company “will keep U.S. stores and its U.S. website open during the process while it seeks a new buyer.”

And though the stores will remain open for now, liquidation sales will be held at them.

“In the event of a successful sale, the Company may pivot away from a full wind down of operations to facilitate a going-concern transaction,” the retailer said, per ABC News. “The company believes this dual-path process will best maximize optionality and value.”

Still, there is some mixed messaging, as People reported that the company was shutting down all locations, with its two main stores in New York City being named in court documents. People also states that “closure is due to start on May 27 and finish on June 10. Forever 21 stores outside the U.S. are operated by other licensees and ‘will continue operating in the ordinary course.’”