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Forever 21 Prepares for Potential Bankruptcy Filing

  • Fashion retailer’s rescue financing talks have stalled
  • Filing would help it close unprofitable stores, recapitalize
A Forever 21 store in Miami Beach

A Forever 21 store in Miami Beach

Photographer: Scott McIntyre/Bloomberg
Updated on

Forever 21 Inc. is preparing for a potential bankruptcy filing as the fashion retailer’s cash dwindles and turnaround options fade, according to people with knowledge of the plans.

The company has been in talks for additional financing and working with a team of advisers to help it restructure its debt, but negotiations with possible lenders have so far stalled, the people said. Focus has thus shifted toward securing a potential debtor-in-possession loan to take the company into Chapter 11, they said, even as some window remains to strike a last-minute deal that keeps it out of court.