Apparel retailer Forever 21 is apparently considering filing for bankruptcy.
An insider source told CNBC that the company’s efforts to restructure its debt run have been falling short.
Thus far, the company has been in talks in attempts to secure additional financing and trying to restructure its debt, but negotiations with possible lenders have so far stalled, the source said.
In light of this, the retailer is now looking for a potential debtor-in-possession loan to take the company into Chapter 11.
Chapter 11 is a form of bankruptcy that involves a “re-organization of a debtor’s business affairs, debts, and assets.”
With more than 815 stores globally, Forever 21 spends large amounts of money on its physical stores all over the world. As such, the company is still weighed down by large, expensive store bases even as sales decline.
The bankruptcy that it seems to be considering is a tool retailers can use to get out of undesirable leases.
According to CNBC, declaring itself bankrupt would not mean that the apparel store has to close down altogether, instead, it would likely result in a “slimmer fleet of stores” for the brand.
Nonetheless, landlords might find themselves under pressure, as Forever 21 is considered a sizeable tenant in the market.
At its peak, the apparel retailer had four stores in Singapore, but is currently left with one last outlet at 313@somerset. -/TISG
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