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The billionaire-owned cosmetics giant Ron Perelman sought court protection in the southern district of New York, and listed both assets and liabilities up to $10 billion, according to court papers. Chapter 11 filings allow a company to continue operating while it works on a plan to repay creditors.
Bankruptcy is a difficult period for the company, which was suffering during the pandemic and faced years of declining sales as consumer tastes changed and upstart brands ate up their market share.
The 90-year-old company began selling nail polish during the Great Depression, and later added coordinating lipsticks to its collection. By 1955, the brand was international.
Perelman’s holding company, McAndrews & Forbes, took control of Revlon in a sharp takeover in 1985, funding a scrap debt deal taken by Michael Milken. McAndrews and Forbes at one point sued Revlon over the company’s acceptance of a reduced offer by Forstman Little & Co., which resulted in a landmark Delaware court decision on the fiduciary duties of board members, sometimes referred to as the “Revlon Rule.” “It was called.
The company’s debt burden proved heavy, especially after the 2016 acquisition of Elizabeth Arden for over $2 billion in debt and bond sales. The company also owns brands including Cutex and Alme, and has markets in more than 150 countries.
In recent years, it has struggled to compete with new brands that advertise heavily on social media. The pandemic dealt another blow, and most recently, the company struggled to address supply chain problems and inflation, which caused margins to shrink.
Revlon mitigated several previous defaults by cutting deals with creditors to rework its obligations out of court, and later banking itself on Citigroup Inc. – intending to process a regular loan interest payment. Stuck in one of the industry’s most infamous blunders—instead accidentally paying out nearly $900 million to some Revlon creditors.
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