As part of its restructuring, the retailer will also seek to renegotiate leases with landlords for the stores that it does plan to keep open, Dustin Branch, a litigation and bankruptcy partner in Ballard Spahr Los Angeles office tells GlobeSt.com. "The extent and scope of any such rent relief will be subject to the individual negotiations between [Forever 21] and the individual landlord," he says.

Generally speaking, companies that file Chapter 11 have 120 days to decide whether they will assume or reject their leases—a period Forever 21 may extend by 90 days upon bankruptcy court approval, Branch says. In many retail cases, the debtor or its real estate consultant will seek rent relief from landlords as a condition to assuming, or assuming and assigning, the lease in the bankruptcy case. The landlord has the option to accept the request, counter with an alternative rent relief, or refuse the request for rent relief. "However, if landlord and debtor do not agree on rent relief, the landlord takes the risk that the debtor may reject the lease," Branch says.

Two of Forever 21's main landlords, Simon Property Group and Brookfield Properties retail group apparently wanted to forestall such an eventuality. The two REITs, according to news accounts, have in negotiations with Forever 21 to buy a stake in the company that would keep it afloat. It is unclear whether these talks are still ongoing or have been shelved.