Forever 21 Nears Bid Deadline Amid Hopes for an Alternative

February 07, 2020

Time is running out for Forever 21, but the bankrupt retailer might still be weighing its options.

Currently in the driver’s seat is the consortium of licensing company Authentic Brands Group and landlords Simon Property Group and Brookfield, which has put in an $81.1 million stalking-horse bid to purchase the fast-fashion retailer as a going concern. Under that agreement, the deadline for competing bidders is tight — any rival offers would need to come in by Friday evening, and competing bidders would duke it out at an auction that would take place next week, though in practice there could be some flexibility on timing.

…It would be no easy task to beat the stalking-horse offer. For one, Simon Property Group and Brookfield command significant leverage, as they own roughly 187 leases between them, about 42 percent of Forever 21’s domestic store leases, according to a court filing this month by the creditors committee. Their deal with ABG in the stalking-horse bid likely factors in any rent savings negotiated as part of the offer, observers said.

“It gives them a structural advantage in their bid,” said Patrick Collins, a bankruptcy partner at Farrell Fritz P.C., who is not representing anyone in the case, and spoke generally. “It’s unclear whether another bidder would, in a short amount of time, be able to reach the same terms, to get to the same place.”

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