Companies that went bankrupt in 2025
Forever 21
Forever 21, a fast fashion brand, targeted women from 15-30 years old. The US company went bankrupt in March 2025 so the 14 Japan stores lost their suppliers. They tried to survive by making clothes in Japan instead. Do you think they were successful?
The cost of producing clothes in Japan was too high so the Japan stores went bankrupt after 7 months.
Why do you think the brand went bankrupt?
online competition
Gen Z values
Some Gen Z customers really care about having sustainable clothes that are good for the environment. Forever 21 clothes are made to be used for 1 or 2 seasons then thrown away.
The two main rivals are the online stores Shein and Temu.
Q1: Have you bought anything from these stores before?
Q2: What is your opinion of these 2 online stores?
Q3: Do you know any differences between them?
| Feature | SHEIN (Japan) | TEMU (Japan) |
|---|---|---|
| Core Age | Gen Z & Young Millennials (Ages 15 to 25) |
Older Millennials, Parents & Seniors (Ages 30 to 60+) |
| Gender Bias | Heavily Female (Approx. 75% women) |
Balanced (Mix of men, women, and families) |
| Main Products Bought |
|
|
| Est. Japan Sales Revenue (GMV) | Approx. ¥150 - ¥200 Billion Driven by heavy local influencer campaigns and standalone pop-up concepts. |
Approx. ¥420+ Billion Japan represents ~5.9% of Temu's massive global GMV, trailing only the US and Germany. |
Have you heard of any scandals involving these companies?
Dangerous Materials
The EU found that over 100,000 items (Toys, cosmetics and electronic batteries) sold on these sites used dangerous materials.
In 2026 the EU fined Temu €200 million for failing to remove the dangerous items
The EU fined Shein for lying about “green” products. Shein lied about…
products being recyclable or sustainable
their goal to cut greenhouse emissions by 30%
products having “no plastics” in them
Breaking Copyrights
Shein is currently suing Temu for stealing internal trade secrets and making “copycat items”
Shein has been sued by dozens of brands (Uniqlo, Levis, H&M) for doing the same thing.
sue (verb) = take someone to court to get money from them
Xinjiang Cotton
Shein’s cotton often comes from Xinjiang which is banned in the US, Canada, EU and UK. China has put around 1 million Muslim Uyghurs in prisons and is forcing them to work in cotton fields and factories.
Uyghur = “wee-ger” ウイグル
Sonder
Sonder apartments in New York, London and Paris
Sonder was a company that rented out apartments. They wanted to combine the comfort of an apartment with the safety and services of a hotel.
Airbnb has many individual owners so the quality and safety differs each time. Sonder wanted to fix the problem by renting out whole buildings or floors.
They decorated the rooms with a similar style to maintain quality and comfort
Q: Why would people choose Sonder apartments instead of a normal hotel?
room size
kitchen / laundry
everything done by app
Their rooms were bigger but prices were the same as or cheaper than hotels in the same area
Some travellers wanted to comfortably cook, eat or heat up food in their room to save money or to relax
Doing laundry let people bring fewer clothes when travelling and saved money
Everything was done by their app so Sonder didn’t need to hire staff to work on the site.
check in
ask questions
ask for help or advice about the local area
unlock doors
access wi-fi
The app only system usually appealed to young travellers
Why do you think Sonder went bankrupt?
Some people prefer in-person services that a hotel provides
International travel was slow to recover after the pandemic
High fuel costs and inflation also affected travellers
The company expanded too quickly and bought too many properties. They often couldn’t fill the properties with guests
Sonder and Marriott hotels tried to integrate their booking systems to save the company but the integration costs were too high so Mariott pulled out of the deal.
23 and Me
23andMe was a company that you let your test your genes.
genes “jeenz” popular genetic testing and biotechnology company. Basically, it allowed customers to learn about their ancestry and health risks through a mail-in saliva kit.
Here is how it worked and what it did:
The DNA Kit: Customers ordered a small plastic tube online, spat into it, and mailed it back to the company's laboratory.
Ancestry Reports: The company analyzed the DNA to break down a person's geographic heritage, showing what percentage of their DNA came from various regions around the world. It also helped users find and connect with biological relatives who had also used the service.
Health Insights: They provided optional reports detailing genetic predispositions to certain health conditions, carrier statuses for inherited diseases, and traits like how a person's body reacts to caffeine.
23andMe, which had a $6 billion valuation at the time of its 2021 IPO, declared bankruptcy in late March. The company then announced in May that it was being purchased by Regeneron $REGN -0.68% Pharmaceuticals for $256 million, in a deal expected to be finalized in the third quarter of 2025. Declining sales of DNA test kits, increased competition, data privacy concerns, and loss of key partnership revenue were cited as reasons for its troubles.
After 23andMe declared bankruptcy, there were myriad concerns about users’ privacy, especially after a 2023 data breach affecting 6.9 million people. Its stock tumbled by 98% from 2021 to November 2024. It then halted work on new therapies, laid off hundreds of employees, and agreed to a $30 million settlement related to the breach.
Here are the primary reasons why the company went bankrupt:
The "One-and-Done" Business Model
Massive Reputation Damage from a Data Breach
Summary: In 2023, hackers infiltrated the site and exposed the personal profiles of 6.9 million customers. The company faced severe public backlash for trying to blame the users' passwords, destroying consumer trust and resulting in multi-million dollar legal settlements that drained their remaining cash. [1, 2, 3]
Failed Pivot to Expensive Drug Discovery
Summary: To create a secondary source of revenue, the CEO burned through over $1 billion trying to use their genetic database to develop new medical drugs. Drug development takes many years and is incredibly expensive; the company ran out of money before these medical programs could generate any real profit. [1, 2]
Failed Subscription Models
Summary: Realizing their one-time sales were drying up, the company tried to launch a paid subscription service offering ongoing health insights. However, customers simply did not find enough ongoing value in genetic updates to justify paying a recurring fee, causing the initiative to falter. [1]
Nikola Corporation
Hooters
It went bankrupt like many casual restaurants in the US. The main cause was rising labor and food costs. The weak US economy also meant customers had less disposable income to eat out
Tokyo (4 locations): Akasaka (the original branch), Ginza, Shibuya, and Shinjuku
Osaka (1 location)
Nagoya (1 location)
Fukuoka (1 location
Which branch do you think closed first? Akasaka, the original store closed first.
Hooters first opened in 2010 in Akasaka. It was a huge hit because it was a seen as a US culture hub. You could watch American sports and eat American food.
The Fukuoka branch closed first
The Akasaka branch closed 2nd. What kind of area is Akasaka?
Akasaka is a premium, high-class corporate district in downtown Tokyo. Historically, it is known for politicians, luxury hotels, and high-end ryotei (refined traditional Japanese restaurants)
Ginza has survived because it’s on the border of Ginza and Shimbashi inside the Ginza Nine
2-minute walk from Shimbashi Station,
The Ginza location offers localized fusion items that you will never find on a standard domestic US menu: [1]
Sliced Garlic Steak with Garlic Rice: A popular localized platter pairing sliced steak with savory, Japanese-style garlic fried rice.
Grilled Sausage Platters: Heavy, German-style Izakaya sausages served alongside American crinkle or curly fries.
Matcha Ice Cream: Alongside standard American chocolate and vanilla, the dessert menu offers traditional Japanese green tea ice cream. [1, 2]
Offers a 1 hour “all you can drink plan” that is illegal in most US states and cities.