Forma Brands, the parent company of Morphe, Lipstick Queen, and Jaclyn Hill's Jaclyn Cosmetics, is considering Chapter 11 bankruptcy and has about $600 million to $700 million of debt, as reported by Reorg Research. People familiar with the process told BeautyMatter that the company was looking at various options to strengthen its financial position, stressing that a definitive direction has yet to be decided. 

A company spokesperson said, "Forma Brands is engaged in constructive discussions with our financial stakeholders regarding ways to strengthen the Company financially and enable us to reinforce our focus on the opportunities we see ahead for our brands. We are excited about the products we will continue to bring to our customers."

Siblings Linda and Chris Tawil bought Morphe in 2008 when it was a trade show-based brush operation, gradually building it into a full-fledged beauty brand leveraging influencer partnerships. In 2019, private equity firm, General Atlantic, took a 60% stake in Morphe Cosmetics at a $2.2 billion valuation. At the time of the transaction, Morphe was reported to be on track to do nearly $500 million in net sales with about $130 million in EBITDA.

Shortly after the deal, in 2019, Forma Brands was established as a global growth-focused beauty platform to function as an incubator, accelerator, and curator of next-generation beauty brands. The business also launched a sub-brand, Morphe 2, skincare brand Bad Habit, and Jaclyn Hill's Jaclyn Cosmetics. They also made two acquisitions, haircare brand Playa Beauty and Lipstick Queen from Manzanita-owned Space Brands.

Covid-19, the decline of the color cosmetic category industry-wide, and supply chain issues have plagued the company. These challenges were compounded by cutting ties with Jeffree Star and James Charles, longtime cash cow collaborators, amid allegations of racism and sexual misconduct.

In March, former Too Faced executive, Eric Hohl, was appointed Chairman and CEO, succeeding Myles McCormick, who led the business through its growth era. The Morphe brand epitomized the millennial Instagram/YouTube era but trends changed and GenZ has flocked to TikTok. Only time will tell if Forma Brands can turn things around.