Forever 21’s sale to two of the nation’s largest mall operators for the modest sum of $81 million is almost a done deal.
A U.S. bankruptcy court judge indicated he would formally approve the sale of the former high-flying fast-fashion chain to Simon Property Group, Brookfield Property Partners and Authentic Brands once the parties finalized some smaller details that are still being negotiated. The new owners have agreed to pay $81 million in cash and assume certain liabilities, including $53 million in merchandise not yet paid for.
The approval nod came after Forever 21, which filed for bankruptcy in September 2019, did not received any qualified bids beyond its stalking horse one by Simon, Brookfield and Authentic Brands. With no other offers, the retailer cancelled an auction for its business that was scheduled for Feb. 10.
“Clearly, this is the only bid, and the alternative is liquidation, which is certainly not in anyone’s interest,” said Judge Gross, reported WWD.
The sale brings an end to the founding family’s control of the chain. Forever 21 was founded in Los Angeles in 1984 by Korean immigrants Do Won Chang and his wife Jin Sook Chang. The Changs, who were eventually joined in the business by their daughters, built the company into a global $4 billion powerhouse. But overexpansion, increased competition and shifting consumer tastes ultimately took a toll on the chain.
Forever 21 racked up significant debts during bankruptcy, according to the WWD report. It estimates it owes some $120 million in unpaid claims to vendors who provided goods during the bankruptcy, and about $10 million to $15 million in similar administrative claims to non-merchandise vendors.
Attorneys for vendor and exporter groups, who had filed objections in the case, have continued to raise concerns about how vendors would be paid after the sale closes, WWD said.