Pedestrians pass in front of the Forever 21. store in New York.
Scott Mlyn | CNBC
Clothing trader Forever 21 is considering filing for bankruptcy as its debt restructuring efforts become dry, a person familiar with the situation told CNBC.
The trader is exploring restructuring options to increase its liquidity while struggling with its operations, CNBC reported earlier. However, these efforts have stalled, making bankruptcy more likely.
It is not immediately possible to determine whether the company has started to raise the so-called. A loan to own a debtor who would finance a potential bankruptcy and it is still possible for the company to be able to avoid filing. Bloomberg first reported news of a potential bankruptcy filing.
Many of the most troubled retailers, such as Forever 21
Forever 21's real estate footprint is particularly large, with more than 815 stores worldwide. Bankruptcies are a tool retailers can use to get out of unwanted leases. Retailers like Barney and Mattress have filed a plea for protection to reduce their footsteps.
In the event of bankruptcy, Forever 21 is likely to appear with a thinner storefront. However, any closure is likely to put pressure on mall owners who rent out these premises, including Simon Property Group and Brookfield Property Partners.
Forever 21 is Simon's seventh largest tenant in terms of rent by a landlord with 99 stores in Simon's portfolio. CEO David Simon told analysts in July that he would consider investing more capital in troubled retailers rather than specifying names to ensure stores remain open.
Forever 21, Simon and Brookfield did not immediately respond to CNBC's request for comment.