Forever 21 is poised to file for bankruptcy in the US after talks over a potential refinancing deal stalled.

The fashion chain, which operates more than 800 stores across the US, Europe, Asia and Latin America, wants to secure a potential debtor-in-possession loan to take the company into Chapter 11 bankruptcy.

Such a move, reported by Bloomberg, would allow it to close unprofitable stores and recapitalise, in a mechanism that is similar to the company voluntary arrangement (CVA) being used by retailers in the UK.

Forever 21’s cash is dwindling and, although it has been working with advisers in a bid to secure new funding and restructure its debt, the business has struggled to win over potential lenders.

Forever 21 now has only a handful of stores remaining in the UK, including a flagship on London’s Oxford Street, after scaling back its presence.