DOJ Objects to Forever 21’s Plan to Repay Administrative Claims

A plan by fashion retailer Forever 21’s bankruptcy estate that would pay just 11% of nearly $250 million in administrative expenses lacks transparency and important disclosures for creditors, the Justice Department’s bankruptcy watchdog said.

Forever 21 Inc. has proposed a “heads I win, tails you lose” process for repayment of administrative expenses—such as taxes, attorneys’ fees, accounting fees—that would result in confusion for creditors, the U.S. Trustee’s Office said in Nov. 25 court filings in the U.S. Bankruptcy Court for the District of Delaware.

Several vendors also objected to the Forever 21’s motion filed Nov. 5. The plan “lays a ...