Forever 21 May File Bankruptcy: What a Business Bankruptcy Case Looks Like
Forever 21 began in 1984 as a small chain of discount clothing stores in California. Founded by Korean immigrant Do Won Chang, the stores originally catered to the large Korean American population of Los Angeles. As the decades passed, Forever 21 moved away from catering mainly to the Korean demographic. Instead, the store began to replicate the styles seen in designer runway shows for a fraction of the cost, appealing to fashion-conscious middle-class teenagers and young adults of all ethnicities.
Forever 21 dominated the retail scene in the early 2000s and mid-2010s. However, the brand’s profits have plummeted over the past few years. Now, the company is headed for bankruptcy. Here are some facts to know about what a business bankruptcy case looks like and what might be in store for Forever 21.
Bankruptcy is the Result of Excessive Debts
Bankruptcy doesn’t just happen because a company isn’t making a lot of money. Instead, bankruptcy happens when a company’s debts exceed its assets. For example, when department store chain Bon-Ton filed bankruptcy in 2018, profits had actually remained relatively even throughout the previous decade. However, the company had an exorbitant amount of debts stemming from investing in new properties and they expected that profits would rise in turn, enabling them to stay solvent. When this didn’t happen, bankruptcy was the only option to satisfy the company’s debtors.
The Goals of Bankruptcy Attorneys in Dallas TX
When a company files for bankruptcy, the next step is typically a liquidation of assets, wherein a company is divided into parts and some of those parts are sold to obtain the cash assets needed to satisfy debts and judgements. The goal of bankruptcy attorneys in Dallas TX is to find solutions that allow the company filing bankruptcy to remain intact while still paying off debtors and finding a way back to financial solvency.
If your company’s debts exceed its assets, the attorneys at Pronske & Kathman want to help. Contact Pronske & Kathman today for more information about how you can file for bankruptcy while keeping your company intact.