Revlon, the world’s largest cosmetics company, declares bankruptcy

• The company has lost shelf space in US stores to celebrity-backed startups, and it has struggled with inflation and supply chain concerns.
• Revlon narrowly avoided many previous defaults by striking out-of-court settlements with creditors to renegotiate its obligations.

After struggling to compete with online-focused startup firms in recent years, cosmetics manufacturer Revlon Inc has filed for Chapter 11 bankruptcy protection.

According to a filing with the US Bankruptcy Court for the Southern District of New York on Wednesday, the nail polish and lipstick business owned by billionaire Ron Perelman cited assets and liabilities ranging from $1 billion to $10 billion.

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Chapter 11 filings allow a business to continue operating while it works out a repayment plan with its creditors.

The bankruptcy filing comes days after the Wall Street Journal revealed Revlon had begun talks with lenders ahead of looming maturities of debt to avoid bankruptcy.

Revlon’s sales have suffered as a result of supply shortages and a failure to quickly transition to in-demand skincare, with the company losing shelf space in US retailers to startups supported by celebrities such as Kylie Jenner’s Kylie Cosmetics and Fenty Beauty by Rihanna.

The 90-year-old company began selling nail polish during the Great Depression and then expanded into matched lipsticks. By 1955, the brand had gone global.

MacAndrews & Forbes Inc, Perelman’s holding firm, gained control of Revlon in an acrimonious acquisition in 1985, paying the deal with bad debt raised by Michael Milken. MacAndrews & Forbes sued Revlon at one point over the company’s acceptance of a cheaper bid from Forstmann Little & Co, culminating in a historic Delaware court ruling on board members’ fiduciary duty, nicknamed the “Revlon Rule.”

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The company’s debt load became severe after it issued more than $2 billion in loans and bonds to fund its acquisition of Elizabeth Arden in 2016. It also owns trademarks such as Cutex and Almay and operates in over 150 countries.

Revlon narrowly avoided many previous defaults by striking out-of-court settlements with creditors to renegotiate its obligations.