Forever 21 has reached an $81.1 million deal to sell its retail business to a consortium of buyers, including mall owners Simon Property Group and Brookfield Property Partners as well as brand management firm Authentic Brands Group.
Four months after filing for bankruptcy, the fast-fashion retailer’s proposal to name the three companies as its stalking-horse bidders has been approved on Tuesday by a judge. Other parties still have until Friday to make counteroffers. If a higher bid is submitted, Forever 21 will hold an auction on Feb. 10.
In an earnings call on Tuesday, Simon Property Group CEO David Simon said that if the transaction is completed, the firm would own 50% of Forever 21.
Simon Property Group and Brookfield Property Partners are two of the teen staple’s biggest landlords. In 2016, Simon partnered with mall owner General Growth Properties — now owned by Brookfield — to save Aeropostale from liquidation. The landlords then had more than 200 of the Aeropostale shops in their combined portfolio.
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“We believe Forever 21, similar to Aeropostale, presents a very interesting repositioning opportunity,” Simon added in the call.
Amid shrinking sales and declining foot traffic, California-based Forever 21 filed for bankruptcy in late September with intentions to restructure and focus on the profitable core part of its operations. FN learned in November that Forever 21 intends to close 111 domestic stores but keep open its outposts in Mexico and Latin America.
Forever 21 is supported by $350 million in financing to aid in restructuring efforts. Its bankruptcy comes at a time when a shift to e-commerce and broader brick-and-mortar downsizing have led to the downfall of many physical retail players. It also joined the swelling list of companies, including, more recently, Barneys New York, that used Chapter 11 protection in the hopes of rightsizing their store fleet and overhauling their business strategies.
In November, ABG and investment banking firm B. Riley Financial closed the deal to purchase Barneys’ intellectual property. As part of the transaction, ABG said it would transform Barneys’ nearly century-old flagship location on New York City’s Madison Avenue into a pop-up retail store.
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