Fast-fashion clothing chain Forever 21 Inc. tapped longtime legal counsel Latham & Watkins for restructuring advice, according to people with knowledge of the matter.
The move adds to signs that Forever 21 is looking for ways to avoid becoming the next victim of the industry shakeup that has forced dozens of long-established chains into bankruptcy or out of business. The retailer operates hundreds of stores, and closing some is one option management might need to consider as part of a turnaround plan, said the people, who weren’t authorized to speak publicly.
International operations also have been a drag on the the Los Angeles-based company, but those would have to be restructured separately, the people said.
Representatives for Forever 21 declined to comment. Latham & Watkins didn’t respond to messages.
A pullback by Forever 21 could add to pressure on retail landlords, who are already reeling from thousands of recent vacancies caused by bankruptcies and liquidations that have left shopping centers and Main Streets pocked with empty storefronts.
Macerich Co., Taubman Centers Inc., Simon Property Group Inc. and the Pennsylvania Real Estate Investment Trust are some of the landlords that count the retailer among their tenants, according to filings.
The ailing chain is looking for more financing to shore up liquidity while allowing founder Do Won Chang to stay in control, Bloomberg previously reported. The company has also talked to Apollo Global Management LLC about lining up debtor-in-possession financing in case Forever 21 decides to file for bankruptcy.
Forever 21 opened its first store in 1984 as Fashion 21, according to its website. It expanded even as new competitors, some online only, entered its affordable fashion space.
The company carries about $500 million of debt in the form of a first-lien asset-based revolver that matures in 2022, according to data compiled by Bloomberg.