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Forever 21, the once-dominant fast-fashion empire, has filed for Chapter 11 bankruptcy protection—again. The retailer’s U.S. operator entered Delaware bankruptcy court with a staggering $1.58 billion in funded debt, planning to shutter its 354 U.S. stores unless a last-minute buyer emerges to salvage the business.

Late Sunday, F21 OpCo announced it would begin winding down operations while simultaneously seeking a going-concern sale of its assets. The filing follows years of declining mall traffic, cutthroat retail competition, and relentless inflation—an economic storm that proved too fierce for Forever 21 to weather.

The Fast-Fashion Empire Undone

Founded in 1984, Forever 21 was once a titan in the fast-fashion industry, drawing throngs of young shoppers with its trendy and affordable clothing. However, shifting consumer habits, e-commerce disruptions, and economic headwinds have chipped away at the company’s foundation.

The retailer’s previous Chapter 11 filing in 2019 led to its acquisition by a consortium including Simon Property Group, Brookfield Property Partners, and Authentic Brands Group. But despite the fresh start, the pandemic-induced retail apocalypse and soaring inflation continued to drain its financial reserves.

According to F21’s co-chief restructuring officer, Stephen Coulombe, the company has hemorrhaged more than $400 million over the last three fiscal years, including a staggering $150 million loss in 2024 alone.

Online Giants and Tariff Loopholes Crush Competition

In a first-day bankruptcy declaration, Coulombe pointed to an uneven playing field created by import tax loopholes benefiting online competitors.

"Certain non-U.S. online retailers that compete with the debtors, such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers," he said.

Under U.S. trade policies, foreign online retailers can avoid import duties on goods valued under $800, giving them a massive price advantage over traditional brick-and-mortar retailers like Forever 21. The fast-fashion chain, which relies on importing large volumes of inventory for its physical stores, has struggled to compete with these cost savings.

What’s Next? Store Liquidations and Court Battles

Despite the bankruptcy filing, Forever 21 plans to keep its U.S. stores and website operational—at least for now—as liquidation sales loom. The company’s international locations are not included in the proceedings, leaving a glimmer of hope for its global footprint.

The retailer has already secured a “plan support agreement” with its secured lenders, signaling that asset liquidation is likely the next step unless a buyer swoops in.

A first-day hearing is set before U.S. Bankruptcy Judge Mary F. Walrath on Tuesday at 11 a.m. EST.