Forever 21 is back in the headlines. This time, it’s the international suppliers who have filed complaints, saying they were misled by the U.S. fast fashion retailer just before it filed for bankruptcy again in March 2025. Yes, again, and this time leaving behind a huge trail of unpaid debts, especially in Asia. Naturally, these suppliers feel deceived, it’s understandable, right? Some directly accuse the brand of using them as a financial lifeline right before collapsing. The result? Millions of dollars in merchandise that will never be paid for, and a level of frustration that no press release can fix…
A discounted order… just before going under
One of the most obvious cases is Leukon Inc., a South Korean sportswear company. Its founder, Kyuseung Ahn, says that Forever 21 asked him to apply a 50% discount on an order… just 48 hours before announcing bankruptcy. He agreed, thinking it was a good faith negotiation. “We were loyal to them. But they tricked us”, he said. Today, Ahn is claiming more than 10 million dollars!!
And he wasn’t the only one. Several companies from China and Southeast Asia also shipped products without knowing the company was about to fall apart. According to court documents, Forever 21 may have intentionally inflated inventory to later liquidate it without paying a cent to the suppliers.
And what about the law?
The creditors’ committee claims at least 433 million dollars are owed!!! But here’s the tricky part: in the U.S., the Bankruptcy Code gives priority to “secured” creditors, while the rest are pushed to the back of the line. In this case, it’s estimated that even those “preferred” creditors will recover only about 3% of what they’re owed. Practically nothing…
What’s going on with Forever 21?
All this comes after Forever 21 was absorbed by Sparc Group (the same group that controls JCPenney and has ties to Shein, Simon Property Group, and Authentic Brands). But the debt ballooned from $230 million to $1.6 billion, leading suppliers to believe that the merger only served to patch financial holes.
“Fattening the cow before the slaughter”
That’s how Christopher Simon, a bankruptcy attorney, puts it. He says these kinds of practices are common: companies on the verge of collapse accelerating orders knowing they won’t pay for them. Legally, some suppliers might recover part of the money if they delivered goods within the 20 days before the bankruptcy… but in practice, many can’t even afford the legal process required to claim it in the U.S.
But the truth is that this time, the manufacturers were left completely unprotected.
Shein, Simon Property, and a ruined reputation
Beyond the money, what’s breaking here is trust. Southeast Asian companies no longer want to work with brands from that conglomerate, and it makes sense. They’ve lost a significant amount of money that they still don’t know if or when they’ll recover.
“I still can’t believe what happened” says Ahn, disappointed. But his testimony is no longer an exception. There are dozens of similar cases.
Are we witnessing the beginning of the end?
Forever 21’s bankruptcy is a financial disaster, not just for them. As we’ve seen, dozens of suppliers were misled for the benefit of someone else… It’s a sign that the fast fashion model is reaching its breaking point.
Abuse of suppliers, shady mergers, promises not kept. All of this is coming with a price. And this time, there may not be a second chance. A clear example of how NOT to run a company. Let’s hope the suppliers recover what they invested and that justice does its job.
