Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, March 17. In today's briefing, Forever 21, once the premier shopping destination for teens who wanted cheap and fashionable clothing, filed for bankruptcy again. Perella Weinberg and Ducera Partners delivered closing arguments in a decade-long lawsuit over whether Ducera founder Michael Kramer breached his contract by leaving Perella to start a competing firm. And a judge ruled that Three Arrows Capital can increase its FTX bankruptcy claim to $1.5 billion, rejecting FTX’s argument that the request was too late and blaming FTX for delays in providing account data.

Fast-fashion retailer Forever 21’s U.S. operator has filed for bankruptcy, the latest retail casualty hurt by changing consumer spending and fierce competition from foreign retailers.

F21 OpCo, as well as some U.S. subsidiaries, filed for chapter 11 process in the U.S. Bankruptcy Court in Delaware, it said in a statement late Sunday. It will implement an orderly wind down of its U.S. business, and added that Forever 21’s locations outside of the U.S. are operated by other licensees and aren’t included in the chapter 11 filings.

F21 OpCo is the operator of Forever 21 Stores and licensee of the Forever 21 Brand in the U.S.

Lawyers for Perella Weinberg Partners and Ducera Partners gave closing arguments on Friday in decadelong litigation between the two investment banks over how Ducera was formed.

At issue in the case is whether Michael Kramer breached his contract with Perella Weinberg when he left the firm in 2015 to start Ducera to advise troubled companies. Kramer had been Perella Weinberg’s restructuring practice lead and hired several of the firm’s restructuring team members to work at Ducera.

“It is clear that there never was a plot by my clients to lift out the restructuring group at Perella Weinberg,” Maaren Shah, a Quinn Emanuel Urquhart & Sullivan attorney who represents Ducera, said during Friday’s hearing in New York County Supreme Court in Manhattan.

Collapsed crypto hedge fund Three Arrows Capital may raise its FTX bankruptcy claim to $1.5 billion from $120 million, a judge has ruled.

Three Arrows, which began liquidating in June 2022, sought approval last November in the U.S. Bankruptcy Court in Wilmington, Del., where FTX filed for creditor protection in 2022.

FTX opposed the revision, arguing the request came too late and that Three Arrows’ liquidators failed to promptly analyze FTX account data. Judge John Dorsey disagreed, saying Three Arrows’ liquidators were “diligent” in trying to get information but FTX "repeatedly delayed" providing the necessary information.

“The evidence suggests that the delay in filing the amended proof of claim was, in large part, caused by” FTX itself, Dorsey said.

An FTX spokesperson told the WSJ on Friday that the ruling only permits the claim without addressing the merit of it. “FTX will object to Three Arrows Capital’s grossly inflated and meritless claim at the appropriate time,” a spokesperson said in a statement.

FTX’s bankruptcy plan, approved last October, projected $14.7 billion to $16.5 billion in available funds. The crypto exchange has said it expected 98% of the creditors by number to get 119% of their allowed claims within months of implementation, which occurred early this year. –Becky Yerak

President Trump escalated his fight with the legal industry by issuing an executive order late Friday aimed at Paul Weiss, one of the country’s top law firms, just days after a federal judge chastised the administration for similar retaliation against another firm.

Paul Weiss is the third major law firm to face censure by the Trump administration in recent weeks. The 1,200-lawyer firm, which regularly advises on some of the biggest deals on Wall Street, is the president’s most high-profile target yet. It played a prominent role in challenging Trump’s policies during his first administration but had stayed out of the fray this time around.

Companies making everything from casual wear to luxury goods and liquor to everyday staples are sounding early warnings of a slowdown in consumer demand. Delta Air Lines and American Airlines cut their first-quarter guidances this past week. On Tuesday, Delta Chief Executive Officer Ed Bastian said that there was “something going on with economic sentiment, something going on with consumer confidence.”

Budget-pressured shoppers are exhibiting “stress behaviors, and we worry about that,” Walmart CEO Doug McMillon said during a Feb. 27 presentation at the Economic Club of Chicago. “You can see that the money runs out before the month is gone,” he added. Working-class and middle-class consumers, hit hard by higher prices, were already beginning to cut back before the November election.

Share your tips, suggestions and feedback with the WSJ Pro Bankruptcy team: Soma Biswas; Alexander Gladstone; Jodi Xu Klein; Akiko Matsuda; Andrew Scurria; Becky Yerak. 

Follow us on Twitter: @SomaBisWSJ; @gladstonea; @jodixu; @AskAkiko; @AndrewScurria; @beckyyerak.