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Forever 21 in deal to sell itself for bargain price of $81 million

Forever 21

Forever 21 is looking to sell its retail business to a group that includes two of its biggest landlords.

According to documents filed in bankruptcy court, the fast-fashion chain has reached an agreement to sell its assets to a group of buyers that includes Simon Property Group Inc., Brookfield Property Partners and licensing firm Authentic Brands Group for $81.1 million. In the filing, Forever 21 said it is seeking approval to name the three companies at the lead, stalking-horse bidders in an auction. The sale would include most of Forever 21's assets, including its namesake stores, RileyRose beauty stores and its e-commerce platforms.

Other potential buyers have until Friday, Feb.7, to make a counteroffer. If other bids come forth, an auction will be held on Feb. 10. Forever 21 is looking to seek approval of the sale by Feb. 11.  (The Chang family that founded and operates the chain has been working to make an offer by joining up with a private-equity company, the Wall Street Journal reported.)

Forever 21 filed for Chapter 11 bankruptcy protection in September, with a plan to close most of its global locations and up to 178 U.S. stores. The company had a total of 815 stores at the time of the filing including 549 locations in the U.S. (It has closed some 100 U.S. stores since the filing.) In court fillings in December, Forever 21 disclosed it has renegotiated its loan to avoid a default in bankruptcy. 

This is not the first time mall owners have stepped in to save a major tenant from likely liquidation and the resulting vacant storefronts in their properties. In 2016, Simon and General Growth Properties, now owned by Brookfield Properties, partnered together as part of a group that won an auction to buy the Aeropostale brand out of bankruptcy court, ultimately keeping its stores open.

Simon and Brookfield ranks among Forever 21’s largest unsecured creditors. 

The third partner in the group to save Forever 21 is Authentic Brands Group, which recently purchased the intellectual assets of Barneys New York, after it filed for bankruptcy.

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