Forever 21 has filed for its second bankruptcy in five years, primarily due to increased competition from online retailers like Shein and Temu. The company is specifically challenged by a trade rule that exempts small shipment packages worth under $800 from tariffs, allowing foreign companies to sell goods at lower prices. In court filings, Forever 21’s restructuring officer pointed out that the de minimis exemption provides significant advantages to competitors, thereby undercutting their traditional business model and contributing to their financial struggles.
The Debtors' business has been materially and negatively impacted by the ability for online retailers to take advantage of the 'de minimis exemption' which exempts goods valued under $800 from import duties and tariffs.
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.
Collection
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