Court Reversal Gives Forever 21 a Stay on Chapter 7 Liquidation

Forever 21 Inc. should get to propose its reorganization plan before being forced to sell its remaining assets under a Chapter 7 liquidation, a bankruptcy court ruled, reversing its earlier order.

The court erred Sept. 16 when it ordered Forever 21 to convert to a Chapter 7 bankruptcy on the grounds that the fashion retailer’s bankruptcy estate was unlikely to get a Chapter 11 plan confirmed, Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware said at a hearing Wednesday.

“I am not opposed to reconsidering a ruling if in fact I have made an ...