Forever 21 files for bankruptcy protection

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From the beginning, the Changs centered their business on affordable, of-the-moment clothing, much of which came from wholesale closeouts that allowed the company to get their merchandise directly from the manufacturers at a lower cost.

The announcement came after reports indicated Forever 21 had hired a team of advisers to seek out private-equity support to refinance and restructure the beleaguered brand. They dreamed of entrepreneurship - originally in the coffee industry, as Business Insider reported in 2015 - and worked odd jobs to make ends meet.

It remains to be seen how many - if any - Forever 21 stores in India remain functional after the bankruptcy move.

Forever 21 Canada was granted protection under the Companies' Creditors Arrangement Act (CCAA) from a Toronto court on Sunday. The CMBS loans total more than $20 billion of debt, though the retailer's direct exposure, given it only occupies a portion of the property, rests at just a fraction of that debt.

"Filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future", the company said in a statement on its website.

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There are about 800 Forever 21 stores in the U.S., Europe, Asia, and Latin America, and so far, we don't yet know how many of those will close and when. As part of its Chapter 11 filing, it will close operations in 40 countries and shutter up to 178 stores in the United States.

In addition to filing for bankruptcy, Forever 21 announced it will close 350 stores worldwide.

Company officials said the store closure list would be determined based on negotiations with landlords.

And in the same month, USA pop star Ariana Grande sued the retailer for using her trademark style to promote its products without her permission, including adverts featuring a "look-alike model". The formerly high-flying Forever 21 has struggled in recent years, challenged by over-expansion, increased competition from discounters such as Target and the rise of online subscription services and rental retail. After "a thorough review of Forever 21 Canada's poor performance and negative cash flow", and considering the bankruptcy protection proceedings launched in the US, the parent firm decided it was in the best interest to immediately stop financially supporting the Canadian subsidiary.

Additionally, consumer trends away from fast-fashion and toward more sustainable models of consumption have impacted Forever 21's relevance.

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