After months of attempting to work out its financial difficulties, fast fashion retailer Forever 21 on Sunday filed for Chapter 11 bankruptcy protection.
The Los Angeles-based brand did the same in Canada’s version of bankruptcy in Toronto, the company said late Sunday, announcing it would cease operations in Asia and Europe, but maintain stores in Mexico and Latin America as well as most of its U.S. locations.
“This was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21,” Executive Vice President Linda Chang said in a statement.
According to court papers cited by Bloomberg, the retail chain — which specializes in getting hot fashion trends to market in record speed — has estimated consolidated liabilities of between $1 billion and $10 billion.
Forever 21 has more than 800 stores in the U.S., Europe, Asia and Latin America. Of those, 178 stores in the U.S. and as many as 350 worldwide will close, Business Insider reported. In all, it reportedly will stop operating in 40 countries.
There are about two dozen locations in the metro New York area.
The company was founded in 1984, and its stores anchor malls nationwide. The bankruptcy announcement leaves shopping center owners jittery about the retailer’s possible departure. The company attempted to soften the blow, assuring customers that their shopping experience would be unchanged.
“This does NOT mean that we are going out of business," the company said in a separate statement addressed to clients. “On the contrary, filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future.”
It did acknowledge that the decision about store closings across the U.S. was up in the air, “pending the outcome of continued conversations with landlords,” the letter said. “We do however expect a significant number of these stores will remain open and operate as usual, and we do not expect to exit any major markets in the U.S.”