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Forever 21 Bankruptcy Names Stalking Horse Bidders
The Simon Property Group and Brookfield Properties have joined forces to acquire the assets of their bankrupt tenant Forever 21 Inc.
The mall landlords also partnered with the Authentic Brands Group, a New York–headquartered brand-development company, to form a stalking-horse group. It will start bidding at an auction for the Los Angeles–headquartered fast-fashion retailer, according to documents filed Feb. 2 at the United States Bankruptcy Court for the District of Delaware.
The stalking-horse bidders have agreed to acquire Forever 21 for $81 million, according to media reports. If no other bidders emerge, Simon, Brookfield and ABG will be able to close the deal by mid-February. A court hearing on the auction is scheduled for Feb. 13. Approval of the deal is scheduled for Feb. 18.
The announcement of stalking-horse bidders is a sign of stability in a bankruptcy that has been described as “disorganized.” In recent weeks, Forever 21 told suppliers that it would be forced to liquidate if a buyer did not emerge.
Forever 21 filed for bankruptcy in September 2019. The bankruptcy filings showed that the company owed between $1 billion and $10 billion to its more than 100,000 creditors. The bankruptcy was a coda for a company that was once considered an innovator and a leader in fast-fashion retailing.
The company became a dominant player in retail. In 2017, it reported earning $3.4 billion in revenue. It ran a sprawling fleet of stores around the globe, with an average retail space that spanned over 38,000 square feet, according to a statement on its website, forever21.com.
Analysts critiqued Forever 21 for not developing its e-commerce channel during an era when digital commerce was skyrocketing and also because the retailer’s owners kept a tight control over the company without consulting equity analysts or a board of directors.
