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Forever 21’s Bankrupt Shell May Stiff Creditors of $200 Million

  • Estate may only be able to repay 17% of high-ranking debts
  • Federal watchdog urges conversion to Chapter 7 liquidation
Closing down and sale signs sit in the widows of a Forever 21 Inc. store in London, U.K, on Thursday, Oct. 31, 2019. In the lead-up to the vote, “both Labour and the Conservatives are expected to come out with pretty punchy views on tax, innovation and public spending, which could have significant implications for both corporates and consumers,” Emma Wall, head of investment analysis at stockbroker Hargreaves Lansdown Plc, said by email.
Photographer: Hollie Adams/Bloomberg

When Forever 21 Inc. sold itself out of bankruptcy this year, it left behind hundreds of millions of dollars in debt owed to suppliers, shippers and landlords. Now, as they seek to get repaid by the fast-fashion chain’s estate, it’s becoming clear that they’re in for some serious pain.

The U.S. Department of Justice’s bankruptcy watchdog is urging the judge overseeing the shell company’s case to convert it to a Chapter 7 liquidation from a Chapter 11 reorganization, estimating that high-ranking creditors owed some $250 million will likely only get 17% of that money back, or less than $50 million, according to court papers.