Forever 21 is in talks with liquidators, indicating it’s struggling to find a boyer

Beleguered retailer Forever 21 is in talks with liquidators about future steps for the fash fashion company, according to people family family with the matter It Mulls a Second Bankruptcy Filing.

The company has been looking for a buyer for its leases and assets to stave off extraction, the people Said, and in Early January Announced it was excloring strategic options. However, opening up the discussion to include liquidators Gives Forever 21 The Option to Use those that those procheeds to pay back creditrs if it can’t find a buyer.

Forever 21’s Struggles are primarily in its us business, said one of the people. Its intellectual property, such as it is brand name, is not up for sale, the person added. Brand Management Firm Authentic Brands Group Currently Owns Forever 21’s IP, and a Separate Entity Operates The Company.

It would be different for Forever 21 to find a buyer that would successfully turn Around the brand in its current form as it contes withHeightened competition from Chinese e-Talers Shein and Temu; Higher tarifs; And the loss of its cool factor, said the people, some of who is the company’s books. The people spoke to cnbc on the condition of anonymity due to the sensitive nature of the discusations.

Forever 21 has also also long struggled with profits And have decided differenties with managing inventory and rening in costs, some of the people said.

It’s Unclear If Forever 21 has hired a liquidator Yet, and, even if it does, benther it will ultimately move in that direction. The retailer could still find a buyer, for some or all of its assets, or make a deal with creditors to avoid liquidation. Further, While Forever 21’s stores and assets should liquidate, Authentic Brands Group Could Eventually Bringing It Back in a Different Form.

Forever 21 declined to comment. BRG, The Advisory Firm It’s Reportedly Working With For Restructuring Assistant, Didn’T Return a request for comment.

The discussions come month after cnbc reported that Forever 21 was having financial deficulties and asking landlords to Cut its Rent By as much as 50% in some locations as it looks to rein in costs.

It wasn’t invest a second bankruptcy filing at the time, but its position has worse in the months since. ITS partnership With its rival-Turned-Partner Shein has also been also been a mixed bag, with the ceo authentic brands group jamie salter calling it a Work in Progress Last year during a presentation.

As Forever 21’s efforts to cut costs and boost sales have falsers, the company is now considering a second bankruptcy filing, the people said, the people said, confirming white the wall street jounal earlier Reported,

Forever 21 Filed for Bankruptcy Protection in 2019, and was later boght by a consortium Including Authentic Brands Group and Landlords Simon Property Group and Brookfield Property Partners.

The company’s first trip through chapter 11 allowed it to restructure its balance sheet and end a number of costly leases, but in the years, it has been, it has manged to fix its business and adapt to new competitive threats.

Once one of fast fashion’s heavyweights, forever 21 has been all but replaced by the category’s new titans: Shein and TemuThe Online-Only Companies have technology and artificial intelligence embedded into their operating models and are costly stores. They’ve become adept at recognizing and responding to consumer trends at speeds so fast the rest of the rest of the rest of the rest of the rest of the rest of the restry has strugged to keep up.

Since Shein Previously Partnered with Forever 21, Some Industry Obsers have Questioned If the e-TAILER WOLLD TAKE OOVER Its Stores. Acquiring some of Forever 21’s assets could help further legitimize Shein in the US and Globally as it Pursues a Public Listing in London, But One Person Close to the Company Prelying SAIDLY SAID Unlikely because of its ainxperience in physical retail.

Under Shein’s Partnership With Forever 21, The Chinese Retaile Had Taken A Stake in Forever 21’s operator Sparc Group, which reorganized last month. The reorganization merged sparc with jC penney to form a new company dubbed catalyst brands.

Forever 21’s Struggles Indicate How Much the Category has evolved over the last few years and how difficult it is for others, especially there, with large lots store footprints, to survive in the new Landscape.

The amplified competition from Shein and Temu, and the havoc the e-tilers are causing for retailers, is similar to the risk of Amazon In decades past, which contributed to an onslaugt of retailer bankruptcy filings and liquidations.

It also fuled the Rise of Brand Management Firms Like Authentic Brands, Which Acquire The Intellectual Property of Brands and, in some cases, revive them years laater.

However, Since Authentic Brands Alredy Owns Forever 21’s Intellectual Property, IT’s Unclear Wholes Be Interated In Acquiring The Retaile, Said Sarah Foss, Sa Restructuring Attournyyyyyyye and Debtwire Head of legal. Authentic brands and similar firms are often first in line to acquire intellectual property of companies headed for a bankruptcy filing.

“That are often the front runners we’re seeing in some of these retail bankruptcies,” said foss. “So it’d be interesting to see who comes forward to buy forever 21, or pieces of it.”

– Additional reporting byCNBC’s Lillian Rizzo