Major discount retailer holding 40% closing down sales as it shuts 200 stores after bankruptcy
A MAJOR discount retailer is holding 40% closing down sales before its bankruptcy claim wipes out 200 of its locations.
The heavy blow for the company will see its main headquarters lost and hundreds of Americans laid off.
The U.S. SunA major discount retailer is holding 40% closing down sales before it’s bankruptcy claim wipes out 200 of its locations[/caption]
Forever 21 is now holding massive sales as it attempts to get rid of its stock before their stores close, per Fox 40.
All merchandise is marked down by 20-40%, so now is a great time to save some money on a bargain.
The chain’s location in Sacramento, California, is currently plastered with signs that signal its imminent closure.
According to a Forever 21 employee, there isn’t a set date for when the store will be closed for good, as reported by Fox 40.
It is located inside the Arden Fair Mall.
KTLA reported that the company eventually plans to lay off nearly 700 employees in California and Pennsylvania.
The announcement of Forever 21’s second bankruptcy was reported at the time by The US Sun.
A spokesperson told USA Today: “This decision was not made lightly.
“And we remain committed to transparency and fair treatment of our employees during this period of transition.”
The statement went on to say how the company was “looking at ways to reduce costs across our operations and optimize our store footprint.”
Layoffs are scheduled for April 21.
Forever 21 has struggled in recent years to keep up with competition.
This includes Chinese online discount retailers Shein and Temu.
Several Forever 21 locations across the country have already announced plans to close their doors, according to local media.
These include stores in Connecticut, California, Washington state, Pennsylvania, Idaho and North Dakota.
Exact plans for Forever 21 are still vague as the company works towards a possible sale in an effort to avoid total bankruptcy.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can't repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.
Sarah Foss, who is head of legal at Debtwire and an expert bankruptcy lawyer, told USA Today: “Chapter 11 liquidation appears to be the most likely scenario for the retail chain as a going concern buyer for its US assets and leases has not yet emerged.
“A liquidation would have a significant impact on shopping malls nationwide which have struggled in recent years amid a shift to online shopping, as well as on Forever 21’s store employees across the country.
“The intellectual property can have significant value even as distressed sales are occurring.”
A sale does not have to spell the end of Forever 21, as it is owned by Authentic Brands Group.
The intellectual property may not be part of a sale, meaning the owners would hold onto the name Forever 21.
More details about what stores will close, including exactly how many, may come in the coming weeks.
Forever 21 is now holding massive sales as it attempts to get rid of their stock before their stores closeGetty
GettyAccording to a Forever 21 employee, there isn’t a set date to when the store will be closed for good[/caption]
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