Forever 21 Seeks to Dismiss Chapter 11 Case After Plan Failure

Forever 21, the bankrupt clothing retailer that sold most of its assets, asked a court to dismiss its Chapter 11 case after failing to get court approval of its reorganization plan.

But the U.S. Trustee, the Justice Department’s bankruptcy watchdog, filed a request with the U.S. Bankruptcy Court for the District of Delaware to instead convert the case to Chapter 7. The conversion would tap an independent trustee to take charge of all remaining property and make payments to creditors.

Conversion is better than dismissal “because the Debtors hold tens of millions of dollars in liquid assets that should be ...