Investing.com-- The U.S. operating company of fast fashion retailer Forever 21 filed for Chapter 11 bankruptcy on Sunday, as the company grapples with increasing headwinds from soft retail traffic and heightened online competition.
The filing is the company’s second bankruptcy filing in six years, and comes after it was unable to find a buyer for its over 300 retail stores in the U.S., heralding a likely liquidation of the firm.
The company had last filed for bankruptcy in 2019, as it grappled with slowing foot traffic in malls, as well as online competition from new entrants such as China’s Shein.
Forever 21 was then bailed out by Sparc, a joint venture between Authentic Brands Group- which owns Forever 21’s trademark- and Brookfield Asset Management (TSX:BAM).
Assets were worth between $100 million and $500 million, while liabilities were between $1 billion and $10 billion, Forever 21 said in a filing with the bankruptcy court in the District of Delaware.
The retailer will conduct liquidation sales at its stores to clear inventory, and will also engage in a court-supervised process of selling and marketing most of its assets.
The company was at the height of its popularity in the late-2000’s, as it opened stores outside the U.S. and in several major upcoming markets, such as India.
But the advent of e-commerce, especially online fast fashion, steadily eroded its sales over the past decade.
Still, its bankruptcy filing only applies to its U.S. operations, given that most of Forever 21’s overseas operations are conducted through franchising and licensing agreements.