Clothing retailer Forever 21 has filed for Chapter 11 bankruptcy protection in the US and plans to close down up 178 stores in the US.
Following the bankruptcy filing, Forever 21 released a statement saying that it plans to "exit most international locations in Asia and Europe" but it will continue operations in Mexico and Latin America following. According to a company spokesperson, the fashion retailer expects to close up to 350 stores globally, including up to 178 stores in the US.
Under Chapter 11 protection, a US company's obligations to creditors are postponed, allowing it to reorganize its debts or sell parts of its business.
A Forever 21 spokesman said that the California-based firm expects to retain between 450 to 500 stores out of the approximately 800 stores it currently operates worldwide following the process. The company has filed a request to shut down up to 178 stores across the US, but provided few details on other markets.
The spokesperson said "Decisions as to which international locations will be closing are ongoing. We do not expect to exit any major markets in the US."
In a public letter released by the retailer on Sunday, it tried to reassure its customers by saying "stores are open" and "it will continue to feel like a normal day". The letter further stated: "This does not mean that we are going out of business - on the contrary, filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future."
According to the company, it has acquired $275 million in financing from existing lenders and $75 million in new capital as part of the Chapter 11 process. Forever 21 Executive Vice President Linda Chang described the recent initiatives as an "important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21".
