Forever 21 filed for bankruptcy protection for the second time in six years on Sunday and blamed fast-fashion e-tailers Shein and Temu for its demise. 

The retailer’s operating company is expected to cease all operations in the U.S. and has already begun liquidation sales at its more than 350 locations, but it’s still open for bids if a buyer is willing to take on its inventory and keep running its stores, court filings show. 

Forever 21 has been seeking a buyer for several months and made contact with more than 200 potential bidders, 30 of which signed confidentiality agreements, but no viable deal has come together, court papers say. CNBC previously reported the operating company was in talks with liquidators and would have a hard time finding a buyer for its business.

The company’s bankruptcy comes six years after it emerged from its first filing only to face the Covid-19 pandemic, the highest inflation in decades, and new competition from Chinese-founded upstarts like Shein and Temu. 

In a court filing, Stephen Coulombe, the operating company’s co-chief restructuring officer, said Forever 21 was “materially and negatively impacted” by Shein and Temu’s use of the de minimis exemption, which “undercut” its business. The exemption is a trade law loophole that has historically allowed goods valued under $800 to be shipped into the U.S. without import duties. President Donald Trump is trying to end it.

“Certain non-U.S. online retailers that compete with the Debtors, such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers,” Coulombe wrote. “Consequently, retailers that must pay duties and tariffs to purchase product for their stores and warehouses in the United States, such as the Company, have been undercut.”

“Despite wide-spread calls from U.S. companies and industry groups for the U.S. government to create a level playing field for U.S. retailers by closing the exemption, U.S. laws and policies have not solved the problem,” he added.

Forever 21′s operator, Sparc Group, which recently reorganized to form a new company dubbed Catalyst Brands, tried to counteract Shein’s competitive threat in 2023 by partnering with the upstart. But the deal didn’t do enough to stem the company’s losses or lead to any changes in de minimis rules, said Coulombe.

“The ability for non-U.S. retailers to sell their products at drastically lower prices to U.S. consumers has significantly impacted the Company’s ability to retain its traditional core customer base,” wrote Coulombe. 

While Forever 21’s operating company is headed toward outright liquidation in the U.S., it doesn’t mean that the brand will cease to exist. Its international stores and website are expected to keep operating, and its brand name and other intellectual property owned by brand management firm Authentic Brands Group are not up for sale, CNBC previously reported. 

The firm could still find new operators that are willing to run the business in the U.S., either now or in the future. 

“We are receiving lots of interest from strong brand operators and digital experts who share our vision and are ready to take the brand to the next level,” Jarrod Weber, global president of lifestyle at Authentic Brands Group, said in a statement. “Our U.S. licensee’s decision to restructure its operations does not impact Forever 21’s intellectual property or its international business. It presents an opportunity to accelerate the modernization of the brand’s distribution model, setting it up to compete and lead in fast fashion for decades to come.”

After its first bankruptcy filing, Forever 21 enjoyed a period of respite where the business performed well. It had been bought by a consortium including Authentic Brands Group and landlords Simon Property Group and Brookfield Property Partners and had new capital and a trimmed down store fleet.

In fiscal 2021, it generated $2 billion in revenue and $165 million in EBITDA. But as competition and inflation increased, compounded by supply chain challenges and shifting consumer preferences, Forever 21’s performance began to sputter. In the last three fiscal years, the company lost more than $400 million, including $150 million in fiscal 2024 alone. The company projects it will lose $180 million in EBITDA through 2025. 

Last year, Authentic Brands Group CEO Jamie Salter said at a conference that buying the business was “probably the biggest mistake I’ve made.” A few months later, CNBC reported that the company was asking landlords to cut its rent by as much as 50% as it looked to reduce costs and stave off a second bankruptcy filing. While those efforts generated $50 million in savings, it wasn’t enough to counteract the company’s losses.

The operating company currently owes $1.58 billion in various loans, and more than $100 million to dozens of clothing manufacturers, primarily located in China and Korea.

Founded in 1984, Forever 21 has long been credited as a leader in the fast-fashion movement. At its peak, the company employed 43,000 people and generated more than $4 billion in annual sales.