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Forever 21 Inc. Looking At Potential Bankruptcy

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Retail enterprise organisation Forever 21 Incorporation is reportedly preparing itself for a potential bankruptcy. This has taken place after the company’s turn-around options have begun fading. This has ultimately affected the retailer’s cash reserves as well. According to a report published in Bloomberg, those who have knowledge of the plans have stated that the company’s officials have been in talks for additional funding since a long time. They have also set up a team of advisers, who are specifically given the task of restructuring the debt fields. Furthermore, consistent negotiations with possible lenders also continue to take place however, the outcome of the same has been long-stalled.

At the moment, the main focus remains on the fact that the company is required to shift towards securing a potential debtor-in-possession who will take charge of the loan procedure and move forward. There are some last-minute deals, that can potentially take place outside the court, expected to continue as well. When representatives of Forever 21 were approached for a comment, they were not able to provide one. 

The bankruptcy filing is expected to help the company in shedding all the stores who has not been bringing them much profit. They will also be recapitalizing the business, as they continue to move forward. However, this can be quite problematic for the major mall owners of the country. The list of mall owners include Simon Property Group Inc and Brookfield Property Partners LP. One of the main reasons why mall owners will be impacted the most by Forever 21’s latest move is because they have been one of the biggest mall tenants to have been standing, even in a flood of bankruptcies within all other retail sectors.

In case Forever 21 really is looking towards shutting down a number of stores, as a part of their restructuring, then it is expected to seriously affect the landlords as well. They will face a major problem filling up the vacancies, when Forever 21 leaves. Simon, whose headquarters are essentially based in Indianapolis, considers this retail brand as its sixth-largest tenant. Not to forget, the fact that this number excludes any department stores that might be in this scenario. There are nearly 99 outlets that go on to cover at least 1.5 million square feet of ground. This information was confirmed through their filing which took place back in March 31.

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