Forever 21: $1.58B Debt and Cash Collateral Liquidation
ElevenFlo Research
June 8, 202612 min readUpdated September 8, 2026
F21 OpCo, LLC, the U.S. operator of fast-fashion retailer Forever 21, filed chapter 11 in the U.S. Bankruptcy Court for the District of Delaware on March 16, 2025, under lead case number 25-10469. The filing was the brand's second trip through bankruptcy in roughly five years, and it was structured from the outset as a lender-controlled wind-down rather than a turnaround. The debtors declined a new-money debtor-in-possession loan, funding the case with cash collateral under a budget and a fixed set of milestones that pushed the estate toward a liquidating plan within about 100 days.
The first-day record paired a going-concern marketing process run by SSG Capital Advisors with chainwide store-closing sales that had already begun before the petition date. When no going-concern buyer emerged, the case resolved as a full liquidation. The court confirmed the amended joint plan on June 24, 2025, the plan went effective on June 30, 2025, and the estate moved into a plan-administrator-led wind-down that remained open into 2026 as claims reconciliation continued.
Forever 21 first sought chapter 11 protection in 2019, when the prior operating company planned to close as many as 178 stores and restructure. The brand's intellectual property and operations were acquired in 2019 and 2020 by a consortium of Authentic Brands Group, Simon Property Group, and Brookfield for about $81 million. The U.S. operating business that filed in 2025 sits below that ownership structure, which the first-day declaration traces through SPARC Group and the December 2024 combination of SPARC and JCPenney into Catalyst Brands.
Management attributed the second filing to a combination of sustained operating losses and external pressure. The first-day declaration states that the company lost more than $400 million over the preceding three fiscal years, and it identifies inflation, supply-chain costs, and competition from online fast-fashion platforms — naming Temu and Shein — as the principal drivers of the decline. News coverage tied the same pressure to the tariff and de minimis advantages enjoyed by those overseas-shipped competitors, which undercut Forever 21 on price.
The retrenchment was visible before the petition. Forever 21 announced the closure of its Los Angeles headquarters and the layoff of more than 350 workers in late February 2025, and industry reporting in the weeks before the filing described plans to close nearly 200 stores. As of the petition date, the debtors operated about 354 leased U.S. stores. The declaration notes the brand employed roughly 43,000 people at its peak.
Capital Structure and the $1.58 Billion Debt Stack
The debtors entered chapter 11 carrying approximately $1.582 billion of funded debt, a load that public reporting rounded to a roughly $1.6 billion figure. The first-day declaration breaks that total into three prepetition facilities and a large intercompany obligation.
The senior layer was an asset-based lending facility of approximately $1.085 billion, the single largest piece of the capital structure. Below the ABL sat a term loan facility of approximately $321 million and a subordinated loan facility of approximately $176 million. The declaration also references an intercompany payable of about $320 million owed to an affiliate identified as Aero.
In 2019, Forever 21 secured $350 million in financing to fund a reorganization attempt. In 2025, the revised disclosure statement framed the case instead as a liquidation in which the ABL lenders would recover most of the realized value, with the remaining facilities and unsecured creditors sharing whatever unencumbered value remained.
Cash Collateral and a Milestone-Driven Timeline
Rather than seek a traditional DIP loan, the debtors asked the court for authority to use the prepetition lenders' cash collateral. The final cash collateral order, entered April 15, 2025, authorized use of cash collateral subject to an approved budget and granted the prepetition secured parties a broad adequate-protection package. That package included replacement liens, superpriority-style protections, and periodic cash payments tied to excess deposit-account balances above a minimum sweep balance.
The order also embedded the deadlines that drove the case to a rapid plan path. It required approval of the store-closing agreement by April 21, 2025, approval of the disclosure statement by May 12, 2025, confirmation by June 24, 2025, and plan effectiveness by June 30, 2025. The same order defined events of default to include missed milestones, budget noncompliance, and unauthorized financing efforts, each enforceable after notice and a remedies period.
Dual-Track Sale and Chainwide Store Closings
The debtors ran a dual-track process from the petition date. SSG Capital Advisors pursued a going-concern sale while the debtors simultaneously ran mass liquidation sales through a joint venture of Hilco, Gordon Brothers, and SB360. The first-day declaration reports that SSG had contacted 217 potential buyers and that 30 parties had entered diligence. The debtors initially sought authority to run asset auctions under section 363 alongside the cash collateral request, preserving the option of a court-supervised sale while the wind-down advanced.
The store-closing program was already underway when the case began. Wave 1 began on February 14, 2025 and Wave 2 on February 27, 2025, with management expecting the full chain to be liquidated before May 1, 2025. The court's final store-closing order authorized assumption of the agency agreement and approved store-closing sales across 355 additional stores plus related facilities, identifying the agent group as Hilco Merchant Resources, Gordon Brothers Retail Partners, and SB360 Capital Partners. The order set the agency economics, including a 17.5% commission on furniture, fixtures, and equipment and a 5% payment to the merchant on gross proceeds from additional agent goods.
The going-concern track did not produce a buyer. By the confirmation hearing, the debtors reported in their memorandum in support of confirmation that the store-closing sales had concluded no later than April 30, 2025 and that the going-concern process had "not produced any viable transactions." With both tracks having run their course, the debtors sought an orderly exit through the plan. That outcome matched the early public messaging, which described Forever 21 winding down U.S. stores while continuing to look for a buyer for the brand.
Liquidating Plan and Class 6 Recovery Split
The debtors filed their initial joint plan and disclosure statement on March 28, 2025, anchoring the case to a plan support agreement noticed the day after the petition. The original disclosure statement framed the case as a liquidation in which remaining unencumbered value would be distributed under a waterfall negotiated with the secured lender groups, and the debtors revised the disclosure materials as the case advanced toward solicitation.
Treatment of Class 6 general unsecured claims turned on the class vote. Under the revised disclosure statement, holders of Class 6 claims were to receive their pro rata share of interests in and proceeds of remaining unencumbered property, but the division of net proceeds depended on whether the class accepted the plan: if Class 6 rejected, the ABL lenders would take 97% of net proceeds, and if Class 6 accepted, the ABL lenders would take 94%.
The plan's release, injunction, and exculpation provisions were core deal terms tied to the plan support agreement, and the disclosure statement described those protections as an integral component of the settlement framework. The court approved the disclosure statement and solicitation procedures before the debtors moved to confirmation, and the confirmation order followed on June 24, 2025, clearing the plan to go effective at the end of the month.
Paul, Weiss Retention and the 327(e) Objection
The debtors built a deep professional team for a compressed case. Young Conaway Stargatt & Taylor, LLP served as lead counsel, with Paul, Weiss, Rifkind, Wharton & Garrison LLP retained as special corporate and finance counsel. SSG Advisors, LLC acted as investment banker, Berkeley Research Group, LLC provided restructuring and CRO services through Stephen Coulombe, who signed the first-day declaration, and Retail Consulting Services, Inc. served as real estate consultant. Kurtzman Carson Consultants, LLC, operating as Verita Global, served as claims, noticing, and administrative agent. The official committee of unsecured creditors retained McDermott Will & Emery LLP, with Cole Schotz P.C. as Delaware co-counsel and Province, LLC as financial advisor.
The most significant retention dispute was the U.S. Trustee's challenge to the Paul, Weiss engagement. In an objection filed under section 327(e), the U.S. Trustee argued that the firm's proposed scope — negotiating and documenting the chapter 11 plan, disclosure statement, sale transactions, and cash collateral usage — amounted to "conducting the case," which exceeds the narrow "specified special purpose" that section 327(e) contemplates. The objection characterized the application as a "back door" around the disinterestedness requirements of section 327(a) and asserted that Paul, Weiss held or represented adverse interests through its concurrent and prior work for the debtors, SPARC and Catalyst Brands, and equity holders or creditors including Simon Property Group, Authentic Brands Group, and Brookfield.
The debtors replied in support of the retention, and the dispute was resolved in their favor; Paul, Weiss was retained as special corporate and finance counsel and ultimately had its fees approved. The omnibus final fee order, entered September 3, 2025, approved final fees and expenses for the case professionals covering the March 16 through June 30, 2025 period, with several awards reflecting consensual reductions agreed with the U.S. Trustee. Young Conaway received $2,289,468.50 in fees and $6,922.49 in expenses; Paul, Weiss received $786,268.50 and $1,034.10; SSG Advisors received $325,000.00 and $750.00; and Verita Global received $53,577.40. On the committee side, McDermott Will & Emery received $1,923,713.00 in fees and $1,609.30 in expenses, Cole Schotz received $1,203,869.50 and $10,206.37, and Province received $1,153,129.00 and $40.00.
Claims Administration and Wind-Down Status
The debtors moved on the first full day of the case to set claims deadlines, and the resulting bar date order established a general bar date of May 12, 2025, with separate governmental, amended-schedules, and rejection-damages deadlines. Claims reconciliation then generated a steady stream of omnibus objections. The debtors filed their first substantive omnibus objection on April 28, 2025 and a second on May 21, 2025, and after the effective date the plan administrator continued the process with additional omnibus objections, including a third filed March 9, 2026 and a fourth filed April 16, 2026.
The wind-down has run well past the effective date. In late November 2025, the plan administrator moved to extend the claims objection deadline, reporting that the bulk of the work to date had focused on reviewing and resolving more than $18 million in asserted administrative claims, and the court extended the deadline to June 29, 2026. The same period saw two affiliate cases, F21 Puerto Rico and F21 GiftCo Management, closed by final decree on December 15, 2025, leaving the main case open for continued administration.
The estate's financial picture appears in the post-confirmation report for the quarter ended December 31, 2025. That report shows cumulative approved and paid bankruptcy professional fees of $10,295,317, non-bankruptcy professional fees of $126,809, and aggregate professional fees and expenses of $10,422,126. It also reports quarterly cash disbursements of $5,559,698.15, including $4,170,340.69 paid on account of Class 3 ABL claims.
Key Timeline
Date
Event
March 16, 2025
F21 OpCo and affiliates file chapter 11 in Delaware (Case No. 25-10469)
March 17, 2025
Notice of filing of the plan support agreement
March 28, 2025
Initial joint plan and disclosure statement filed
April 15, 2025
Final cash collateral order entered
April 30, 2025
Store-closing sales conclude; going-concern process produces no viable transaction
May 12, 2025
General bar date for proofs of claim
June 24, 2025
Confirmation order entered
June 30, 2025
Plan effective date
September 3, 2025
Omnibus order approving professionals' final fees entered
December 15, 2025
Claims objection deadline extended to June 29, 2026; two affiliate cases closed by final decree
March 9 & April 16, 2026
Plan administrator files third and fourth omnibus claims objections
Key Timeline
Frequently Asked Questions
Who is the claims agent for Forever 21 (F21 OpCo)?
Kurtzman Carson Consultants, LLC, operating as Verita Global, serves as the claims, noticing, and administrative agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.
Did Forever 21 reorganize or liquidate in its 2025 bankruptcy?
The case resolved as a liquidation. A going-concern sale process run by SSG Capital Advisors produced no viable transaction, the chain's stores were closed through agency sales that concluded by April 30, 2025, and the debtors confirmed a liquidating plan that went effective June 30, 2025.
What was the general bar date in the F21 OpCo case?
The bar date order set a general claims bar date of May 12, 2025, with separate deadlines for governmental claims, amended-schedule claims, and rejection-damages claims. The plan administrator has continued to reconcile claims under deadlines later extended into 2026.
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
