Revlon Inc declared Chapter 11 bankruptcy after being unable to handle its massive debt burden in the face of a supply chain crisis and rising inflation.
The cosmetics conglomerate requested judicial protection in the Southern District of New York in late April, with assets reaching $2.3 billion. According to court documents dated June 15, the company has total obligations of $3.7 billion, including 6.25% senior notes due in 2024.
Revlon was founded in 1932 by brothers Charles and Joseph Revson, as well as Charles Lachman, and immediately began selling nail polish. It had become an international trademark by the mid-1950s. The 90-year-old firm during the Great Depression eventually expanded its line to include matched lipsticks. In 1985, billionaire businessman Ronald Perelman’s MacAndrews & Forbes purchased it. Revlon’s goods are currently available in over 150 countries.
In addition to the Revlon brand, the firm controls well-known labels including Elizabeth Arden, Almay, and Cutex, as well as perfumes endorsed by Christina Aguilera and Britney Spears. It has experienced greater competition in recent years from new businesses such as those funded by celebrities like Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Beauty.
By filing for Chapter 11 bankruptcy protection in the United States, Revlon will be allowed to continue operations while negotiating a repayment plan with its creditors. The bankruptcy brings to a close a turbulent time for the corporation, which struggled during the epidemic and saw years of dwindling sales as customer preferences changed and upstart brands ate into its market share.
Aside from the dollar bond, Bloomberg-compiled statistics show that Revlon has 10 loans totaling nearly $2.6 billion that are due to mature in the next three years. The company’s debt load proved unsustainable, especially after it issued more than $2 billion in loans and bonds to fund its acquisition of Elizabeth Arden in 2016. Revlon narrowly avoided multiple previous defaults by striking out-of-court settlements with creditors. The company later became involved in one of the banking industry’s most infamous blunders when Citigroup Inc., intending to process a routine loan interest payment, instead paid some Revlon creditors nearly $900 million.
