Thu 16 June 2022:
Revlon Inc, a cosmetics company, has filed for Chapter 11 bankruptcy protection after struggling in recent years to compete with online-focused startup competitors, Reuters reports.
On Wednesday the nail polish and lipstick maker owned by billionaire Ron Perelman listed assets and liabilities between $1bn and $10bn, according to a filing with the US Bankruptcy Court for the Southern District of New York.
Chapter 11 bankruptcy filings allow a business to continue operating while it works out a repayment plan with its creditors.
Revlon has been unable to keep pace with rivals L’Oreal SA and Estee Lauder Cos. as well as upstart makeup and personal-care brands that have turned to video bloggers and Instagram personalities to fuel growth.
In recent years, it’s struggled to compete with newer brands that advertise heavily on social media. The pandemic provided another blow, and more recently, the company struggled to address supply chain problems and inflation that dented margins.
Revlon’s sales have suffered as a result of supply shortages and a failure to quickly move to in-demand skincare, and the company has lost shelf space in US retailers to startups funded by celebrities like Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Beauty.
The 90-year-old company got its start selling nail polishes in the throes of the Great Depression, and later added coordinated lipsticks to its collection. By 1955, the brand was international.
Perelman’s holding company, MacAndrews & Forbes Inc, took control of Revlon in an acrimonious takeover in 1985, funding the deal with junk debt raised by Michael Milken. MacAndrews & Forbes at one point sued Revlon over the company’s acceptance of a lower offer from Forstmann Little & Co, resulting in a landmark Delaware court decision on the fiduciary duties of board members, sometimes dubbed the “Revlon Rule.”
The company’s financial load became too much to bear, especially after it sold over $2 billion in loans and bonds to fund the acquisition of Elizabeth Arden in 2016. It also owns Cutex and Almay brands and sells its products in more than 150 countries.
Revlon narrowly avoided default in the past by striking out-of-court arrangements with creditors to renegotiate its obligations.
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