Forever 21 has reached a deal to sell off its assets for $81 million, four months after filing for Chapter 11 bankruptcy.
As part of the transaction, the struggling fast-fashion retailer would be sold to a consortium made up of mall operators Simon Property Group, Brookfield Properties and brand management firm Authentic Brands Group, according to a Sunday court filing. The sale would include all of Forever 21’s assets, including its remaining stores and its beauty line RileyRose.
The group has been designated as the “stalking horse bidder” for Forever 21 — meaning the deal remains subject to approval by a judge. Other potential buyers have until February 7 to place bids for the company.
Forever 21 is among the many traditional retailers that have struggled to keep up amid the rise of online shopping, which has cut foot traffic to malls and brick-and-mortar stores. High debt levels and rent costs have also burdened traditional retailers.
In recent years, even healthy retailers have closed stores and struggling ones have filed for bankruptcy.
Forever 21 filed for bankruptcy in late September and announced a plan to overhaul its global business by closing hundreds of stores in the United States and abroad to cut down its lease costs. The ability to get out of leases and close stores at lower cost is a key advantage that the bankruptcy process affords retailers.
Selling to a new owner will allow Forever 21 to continue operating, the company said in a statement Monday.
“Once approved the agreement will allow Forever 21 to come out of bankruptcy, keeping its headquarters, stores and E-commerce operations open, providing fashions and trends that customers know and love for years to come,” Forever 21’s statement reads.
Authentic Brands Group also recently purchased another well-known retailer, luxury New York department store Barneys, after it filed for bankruptcy in August. The $271 million deal involved closing the retailer’s doors, according to the Wall Street Journal, and was approved in October.