Forever 21: From $11,000 and a Single Store to Chapter 22 Liquidation

Forever 21 filed for chapter 11 protection on September 29, 2019, in the U.S. Bankruptcy Court for the District of Delaware after international expansion outpaced the company's single supply chain and merchandise that sold well domestically failed to resonate abroad. Do Won Chang and Jin Sook Chang had built the closely held fast-fashion retailer from a single 900-square-foot store in Highland Park, Los Angeles, into a global operation generating $4.1 billion in annual sales at its peak. Eight debtor entities entered the cases under lead case number 19-12122, carrying approximately $227.7 million in funded debt against a store portfolio with $450 million in annual occupancy costs.

The debtors filed a sale motion on January 30, 2020, and the 363 sale closed on February 19, 2020 — less than five months after the petition date — to a consortium of Authentic Brands Group, Simon Property Group, and Brookfield Property Partners for $81 million. The sale left the estates administratively insolvent, the debtors filed five plan iterations without obtaining confirmation, and the case was dismissed in February 2023. The buyer entity, F21 OpCo LLC, filed chapter 11 in March 2025 and liquidated all U.S. stores.

Debtor(s)	Forever 21, Inc.
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	19-12122
Petition Date	September 29, 2019
Judge	Hon. Kevin Gross
DIP Facility	$275M ABL (JPMorgan Chase) + $75M term loan (TC Lending); $350M total

The Rise of Forever 21

Do Won Chang and Jin Sook Chang emigrated from South Korea to Los Angeles in 1981 with no savings, no formal secondary education, and minimal contacts. Mr. Chang worked three jobs — janitor, gas station attendant, and café worker — while Mrs. Chang worked as a hairdresser. After three years, the couple had saved $11,000.

Mr. Chang noticed that people in the garment industry seemed to do well, and he believed the couple's combination of his relationship-building skills and Mrs. Chang's fashion sense would serve them in the industry. In 1984, he opened a store in Highland Park, Los Angeles, naming it "Fashion 21." The 900-square-foot shop generated $700,000 in merchandise sales in its first year.

Mr. Chang rebranded the company as "Forever 21" in 1987. Mrs. Chang managed design and merchandising while Mr. Chang handled landlord and vendor relationships. The couple reinvested all earnings into merchandise and new locations, opening a new store nearly every six months during the initial expansion phase. Early growth relied on family: Mrs. Chang enlisted her brothers and cousins to help open stores in Houston and Northern California.

National and international expansion. Expansion was slow along the west and south coasts during the late 1980s and 1990s. By the mid-to-late 2000s, Mr. Chang had built a supply chain capable of moving trend-conscious merchandise from design to store shelves at speed. The 2009 real estate downturn created an opening: landlords offered large-format locations at reduced rents as retailers like Saks, Sears, Mervyns, and Borders vacated large-format spaces. Forever 21 expanded into these locations, acquiring storefronts in Manhattan, London's Oxford Street, and Tokyo's Shibuya District.

At its peak, Forever 21 employed 43,000 people, operated more than 800 stores across approximately 40 countries on five continents, and generated $4.1 billion in annual sales. The Changs retained full ownership throughout. Their daughters — Linda Chang as Executive Vice President and Esther Chang as Vice President of Merchandising — held key operational roles. The family also launched Riley Rose, a beauty and lifestyle concept.

Overexpansion and Financial Decline

The international expansion of the 2000s and early 2010s strained Forever 21's single domestic supply chain. The company's merchandise strategy, optimized for American consumers, failed to resonate across European and Asian markets. The expansion left Forever 21 with some of the largest retail storefronts in the country — averaging 38,000 square feet, with some exceeding 90,000 square feet — and occupancy obligations to match.

Consolidated net revenue declined 18% and EBITDA fell 137% as international locations generated losses. Annual occupancy costs across the store portfolio totaled approximately $450 million. By the petition date, outstanding accounts payable to vendors reached approximately $347 million, and there was zero availability under the company's $375 million ABL facility with JPMorgan Chase Bank.

Online sales accounted for 16% of Forever 21's total revenue. Total funded debt was $227.7 million, but the company had no remaining liquidity.

Prepetition capital structure. The debt consisted of a $194.5 million draw on the $375 million ABL facility (JPMorgan Chase, agent), two term loans totaling $15 million provided by the Chang family — Term Loan A ($10 million from Do Won Chang) and Term Loan B ($5 million from the Linda Inhee Chang 2012 Trust) — and a $13.2 million Praxton note denominated in Philippine pesos.

Chapter 11 Filing and First-Day Relief

Forever 21 filed chapter 11 petitions on September 29, 2019. The eight debtor entities included Forever 21, Inc., Alameda Holdings, Forever 21 International Holdings, Forever 21 Logistics, Forever 21 Real Estate Holdings, Forever 21 Retail, Innovative Brand Partners, and Riley Rose.

Key professionals. The debtors retained Kirkland & Ellis LLP as lead counsel, Alvarez & Marsal North America LLC as financial advisor (with Jonathan Goulding serving as Chief Restructuring Officer), and Lazard Freres & Co. LLC as investment banker. The official committee of unsecured creditors retained Kramer Levin Naftalis & Frankel LLP as counsel, with Saul Ewing Arnstein & Lehr LLP as co-counsel. Prime Clerk LLC served as claims and noticing agent.

DIP financing. The debtors obtained a two-tranche DIP facility totaling $350 million:

Facility	Commitment	Lender	Key Terms
DIP ABL	$275 million	J.P. Morgan Securities LLC	Creeping roll-up of prepetition ABL; $75M letter of credit sublimit
DIP Term Loan	$75 million	TC Lending, LLC	$60M new money available on interim basis

The court entered the interim DIP order on October 2, 2019, and the final DIP order on November 5, 2019. Lazard had begun soliciting DIP proposals in late August 2019, contacting 13 potential lenders initially and expanding outreach to 18 additional parties.

International wind-down. Forever 21 planned to exit operations in 40 countries, including Canada and Japan, while continuing in Mexico and Latin America. Approximately 96% of Latin American stores were generating positive cash contributions at the time of filing. The company announced plans to close approximately 350 stores worldwide, with roughly half in the United States.

The 363 Sale to Simon, Brookfield, and ABG

Marketing process and bid procedures. Lazard conducted the sale marketing process, reaching out to multiple potential acquirers. The debtors filed the sale motion on January 30, 2020, and the court entered the bidding procedures order on February 4, 2020.

Only qualified bid received. The Asset Purchase Agreement with F21 OpCo LLC was the only qualified bid submitted before the deadline. Because no competing bids emerged, no auction was held. The court entered the sale order on February 13, 2020, and the transaction closed on February 19, 2020.

Buyer consortium. F21 OpCo LLC was formed by three parties:

Buyer	Ownership Stake
Authentic Brands Group	37.5%
Simon Property Group	37.5%
Brookfield Property Partners	25%

The total purchase price was $81 million for substantially all of the debtors' assets, including the Forever 21 and Riley Rose brands, inventory, store leases, and the e-commerce platform. Of the purchase price, $53 million was set aside for unpaid merchandise; suppliers were owed approximately $347 million.

The sale order authorized the buyer to conduct store closings and going-out-of-business sales at locations the buyer chose not to retain. Simon Property Group and Brookfield were both major landlords to Forever 21 stores.

Landlord and creditor objections. The sale drew objections from multiple landlord groups, Korean and Chinese vendor groups, and Oracle, among others. The official committee of unsecured creditors filed a limited objection raising concerns about bid protections provided to the stalking horse. The court approved the sale over these objections.

Post-Sale Administrative Insolvency and Case Dismissal

At the sale hearing, CRO Jonathan Goulding testified that after the asset sale, the debtors would have only $5 to $15 million in cash to pay approximately $120 million in post-petition trade claims, plus $10 to $15 million in other administrative claims (excluding professional fees). Even with anticipated proceeds from a real property sale ($17.2 million) and tax refunds (~$30 million), the debtors projected they could pay administrative creditors only 15% to 20% of allowed claims.

U.S. Trustee conversion motions. The U.S. Trustee filed two motions to convert the cases to chapter 7:

• The first motion (August 19, 2020) alleged cause under 11 U.S.C. \S 1112(b)(4) based on substantial diminution of the estate, absence of reasonable likelihood of rehabilitation, delinquent monthly operating reports, and unpaid quarterly U.S. Trustee fees of $17,625.

• The renewed motion (September 9, 2021) followed the denial of the disclosure statement.

Plan attempts. The debtors filed five plan iterations over nearly two years, beginning with the original joint plan on December 18, 2019, and ending with the Fourth Amended Plan on July 20, 2021:

Plan Version	Date Filed
Original Joint Plan	December 18, 2019
First Amended Plan	November 5, 2020
Second Amended Plan	April 20, 2021
Third Amended Plan	June 11, 2021
Fourth Amended Plan	July 20, 2021

The Fourth Amended Plan proposed to distribute "Distributable Cash" — from tax refunds, warehouse sale proceeds, Korea settlement proceeds, insurance proceeds, and the wind-down amount — to administrative and unsecured creditors on a pro rata basis. General unsecured claims (Classes 3A and 3B) would have received a pro rata share of the General Unsecured Claims Recovery, while existing equity interests (Class 6) would have been canceled without any distribution.

The court denied approval of the disclosure statement for the Fourth Amended Plan on July 29, 2021. No plan was ever confirmed.

Administrative claims settlement. The debtors filed a motion under Rule 9019 on November 5, 2020, to approve an administrative claims settlement. The retained professionals agreed to run the settlement process without receiving payment for the work necessary to facilitate the process.

Case dismissal. The case was dismissed on February 17, 2023, pursuant to section 1112(b). The dismissal order authorized dissolution of the remaining debtor (Forever 21, Inc.) and preserved all prior orders — including the sale order — for finality of judgment and res judicata. Assets acquired by the buyer under the sale order were confirmed as remaining with the buyer and not revesting with the estate.

The Second Filing: F21 OpCo's Chapter 22 (2025)

F21 OpCo LLC operated the Forever 21 brand under the SPARC Group (later Catalyst Brands) umbrella. The ownership structure separated intellectual property — held by Authentic Brands Group — from retail operations run by the operating entity. ABG retained the brand's licensing rights while F21 OpCo operated the physical retail stores.

F21 OpCo filed chapter 11 on March 16, 2025, in the District of Delaware (Case No. 25-10469, Judge Mary F. Walrath). CFO Brad Sell stated that the company had been "unable to find a sustainable path forward" given competition from foreign fast-fashion companies — citing Shein and Temu as competitors that exploited a de minimis tariff exemption to avoid import duties — "as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends."

The 2025 filing listed assets of $100 million to $500 million and liabilities of $1 billion to $10 billion. The company had accumulated cumulative losses exceeding $400 million in the three years preceding the filing and operated approximately 354 U.S. stores with roughly 9,260 employees (approximately 1,750 full-time, 7,190 part-time, and 320 seasonal).

The debtors retained Paul Weiss Rifkind Wharton & Garrison LLP and Young Conaway Stargatt & Taylor LLP as legal counsel, BRG as financial advisor, and SSG Capital Advisors as investment banker. The company operated on cash collateral rather than traditional DIP financing. All U.S. stores closed by the end of April 2025 in a full liquidation, with creditors facing substantial losses.

Key Timeline

The petition date, sale closing, the February 2023 dismissal, and the second filing mark the main procedural milestones.

Date	Event
1984	Do Won Chang opens first "Fashion 21" store in Highland Park, Los Angeles
1987	Company rebranded as "Forever 21"
September 29, 2019	Chapter 11 petitions filed (8 entities) in Delaware
October 2, 2019	Interim DIP order entered ($350M total facility)
November 5, 2019	Final DIP order entered
January 30, 2020	Sale motion filed
February 4, 2020	Bidding procedures order entered
February 13, 2020	Sale order entered ($81M to F21 OpCo LLC)
February 19, 2020	Sale closed; ABG 37.5%, Simon 37.5%, Brookfield 25%
August 19, 2020	U.S. Trustee files first conversion motion
July 29, 2021	Disclosure statement for Fourth Amended Plan denied
February 17, 2023	Case dismissed; remaining debtor authorized to dissolve
March 16, 2025	F21 OpCo LLC files chapter 11 (Case No. 25-10469)
April 30, 2025	All U.S. Forever 21 stores closed

Frequently Asked Questions

What caused Forever 21 to file chapter 11 in 2019?

Forever 21's rapid international expansion during the 2000s and early 2010s strained its single domestic supply chain. Merchandise that sold well in the United States failed to resonate in European and Asian markets, contributing to an 18% decline in net revenue and a 137% EBITDA decline. Annual occupancy costs totaling ~$450 million and zero availability under its $375 million ABL facility left the company unable to fund operations.

Who bought Forever 21 out of bankruptcy?

A consortium consisting of Authentic Brands Group (37.5%), Simon Property Group (37.5%), and Brookfield Property Partners (25%) purchased substantially all of Forever 21's assets through a 363 sale. The buyer entity was F21 OpCo LLC, and the sale closed on February 19, 2020.

What was the purchase price for the Forever 21 sale?

The total purchase price was $81 million. No competing bids were submitted, so no auction was held. The estates were left administratively insolvent, with $5 to $15 million in cash against approximately $120 million in post-petition trade claims.

Why did Forever 21 file for bankruptcy again in 2025?

F21 OpCo LLC cited competition from Shein and Temu, which the company said exploited a de minimis tariff exemption to avoid import duties. Rising costs, economic pressures on the retailer's core customers, and evolving consumer trends also contributed. The company had accumulated cumulative losses exceeding $400 million in the three years before the 2025 filing.

How many stores did Forever 21 close?

In the 2019 case, Forever 21 closed approximately 350 stores worldwide and exited operations in 40 countries. In the 2025 filing, all remaining 354 U.S. stores were liquidated, with the last locations closing by the end of April 2025.

What happened to unsecured creditors in the 2019 case?

The debtors' Fourth Amended Plan proposed a pro rata distribution from "Distributable Cash" to general unsecured creditors (Classes 3A and 3B), but the disclosure statement was denied by the court and no plan was ever confirmed. The case was ultimately dismissed in February 2023. The estates had $5 to $15 million in available cash against approximately $120 million in post-petition trade claims.

What is a chapter 22?

A "chapter 22" is an informal industry term for a company that files chapter 11 for a second time. Forever 21, Inc. filed chapter 11 in September 2019 and sold its assets to F21 OpCo LLC in February 2020. F21 OpCo filed its own chapter 11 in March 2025.

Who is the claims agent for Forever 21?

Prime Clerk LLC (now Kroll Restructuring Administration LLC) serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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