‘They Played Us’: Forever 21 Vendors Scorn Retailer’s Bankruptcy

When Forever 21’s US operator asked for a discount of as much as 50% on a shipment from Kyuseung Ahn’s Seoul-based activewear supplier Leukon Inc., Ahn agreed to the American fast-fashion chain’s demands. For Ahn, it was business as usual: the goods were delivered and the two were exchanging emails on March 14. 

Two days later, the Forever 21 operator filed for bankruptcy in the US.

Ahn is among a number of vendors that are now alleging Forever 21’s US operator asked for discounts on orders and took delivery of shipments shortly before filing for bankruptcy, without disclosing their plan to reorganize. A group of unsecured creditors, all of whom have $433 million of claims against the operator, have alleged in court filings that these suppliers should have been entitled to full payment under US bankruptcy code.

General creditors “are set up to get absolutely smoked by this bankruptcy” and the unsecured creditor committee is “going to do everything in its power” to test and improve the result, Justin Alberto, an attorney for the committee, said during a court hearing this month.

However, the Forever 21 operator’s $1.6 billion in funded debt is making it unlikely vendors will see anything, the group of creditors has said.

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