Bankrupt Forever 21 seeks auction with hopes of keeping business alive

Fashion retailer declared bankruptcy in September

Forever 21 CEO Do Won Chang (Credit: Getty Images)
Forever 21 CEO Do Won Chang (Credit: Getty Images)

Bankrupt fashion retailer Forever 21 asked a court to approve an auction, an option it hopes would keep it from liquidation.

Forever 21 has been engaging in “substantial, round-the-clock negotiations” with an unnamed stalking-horse bidder and asked the court to approve the sale of “substantially all” of its assets, according to Bloomberg. The retailer’s lawyers requested a sale hearing on Feb. 4, with the ultimate goal of reaching a deal that would keep Forever 21 in business.

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Authentic Brands Group — which recently acquired bankrupt luxury retailer Barneys — and Forever 21 landlord Simon Property Group were reportedly in talks to acquire the troubled retailer. It wasn’t clear if those companies were the unnamed bidder in Forever 21’s court filing.

In September, Forever 21 had sought a sale to landlords Simon and Brookfield Property Partners, which are also its two largest unsecured creditors. Those talks fell apart and the retailer filed for bankruptcy soon after. The chain has since been unable to raise enough money to exit the bankruptcy process, amid dismal sales and concerns that its founders, the Chang family, are not willing to relinquish control. [Bloomberg] — Georgia Kromrei