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.
