Forever 21 has reached a deal to sell itself to a group of buyers, including Simon Property Group, Brookfield Property Partners and Authentic Brands Group, for $81 million, according to court papers. The bid will kick off a stalking horse auction that will last through Feb. 7, with Forever 21 seeking bankruptcy court approval for a sale on Feb. 11.
Simon and Brookfield are Forever 21’s two largest landlords, while Authentic Brands has recently picked up the licensing rights for other troubled retailers, including Barneys New York, Camuto Group and Nine West. Additionally, Simon and Authentic Brands previously partnered with Brookfield-owned General Property Group to save Aéropostale from liquidation in 2016.
Another interested party is Forever 21’s founders, the Chang family, who are looking to partner with a private equity form to place their own bid, a person familiar with the matter told The Wall Street Journal. Any rival winning bid also must pay Forever 21 a breakup fee of more than $4.6 million.
The sale process is the culmination of a Chapter 11 bankruptcy protection process Forever 21 set in motion at the end of September 2019. The retailer also has attempted to restructure itself by exiting Europe and Canada, shrinking its presence in Asia and Latin America and shuttering more than 100 stores in the U.S.
Forever 21 was facing challenges even during its periods of success: designers filed at least 250 intellectual property theft cases against the fast-fashion retailer over the past 20 years, according to Bloomberg Businessweek. Former employees also claimed that the company expanded past its managerial capacity and followed poor purchasing practices, which led to a “pendulum effect” where stores often had too much or too little merchandise.