Forma Brands, the parent company of Morphe, filed for bankruptcy in Delaware with plans to be taken over by lenders, including Jefferies Finance and Cerberus Capital Management. The Chapter 11 filing will allow the business to keep operating while it seeks court approval of a restructuring plan.

WHO: Forma Brands (formerly known as Morphe Holdings) is an incubator, accelerator, and curator of next-generation beauty brands and products. Its multi-branded and multi-category portfolio includes Morphe, Morphe 2, Jaclyn Cosmetics, Bad Habit, Lipstick Queen, and Playa Beauty.

WHY: The proposed transaction is expected to significantly strengthen Forma Brands' financial position and provide additional support for the execution of its long-term growth strategy, which will focus largely on the company's global wholesale and e-commerce operations.

IN THEIR OWN WORDS: Simon Cowell, President of Forma Brands, said, "Over the last year, Forma Brands has been implementing initiatives to stabilize our business and reposition our organization for long-term growth. This agreement is a testament to the strength of our brands most meaningful to our consumers, including Morphe and Morphe 2. We will have additional financial resources available to invest in our multi-category portfolio, product launches and innovative brand and marketing strategy as we advance our vision to inspire creativity, promote inclusivity and connect with consumers around the world through beauty. We appreciate the continued support of our financial partners and believe this is the best path forward for Forma Brands as we position the business for the long term."

Mr. Cowell continued, "We are excited to reinforce our focus on the opportunities we see ahead for our brands and continue bringing our thoughtfully selected beauty products to consumers through our individual online brand platforms, retail partners and Morphe stores outside the U.S. We thank our stakeholders for their continued support, including our global creators, influencers, affiliate and retail partners and our vendors and suppliers, all of whom play a key role in helping us curate the next generation of beauty brands and products. I also extend my deepest appreciation to our team members for their commitment to Forma Brands and for always going the extra mile to deliver thoughtfully selected products to our consumers."

DETAILS:

• Forma Brands filed for Chapter 11 bankruptcy in Delaware with its direct and indirect subsidiaries.
• The company has $500 million and $1 billion of funded principal debt and interest obligations. 
• Influencers are among the company's largest unsecured creditors; James Charles has unsecured claims of $2.16 million, while Jaclyn Hill and Jeffree Star have unsecured claims of $2 million and $1.4 million, respectively.
• The company has entered a proposed acquisition deal with lenders Jefferies Finance and Cerberus Capital Management, in which creditors will provide $33 million of fresh financing. The proposed acquisition includes Forma's wholesale operations, online platforms, and international Morphe retail stores while setting a floor for other offers, and must be approved by a federal judge.
• According to court documents, Forma intends to end its licensing agreement with Ariana Grande's r.e.m. beauty. 
• The company is closing all Morphe's US stores. 
• In connection with the court-supervised sale and restructuring process, Stephen Marotta has been appointed as Chief Restructuring Officer. He's a senior MD at Ankura Consulting Group with more than 35 years of financial restructuring experience. He served as Chief Restructuring Officer at Brooks Brothers and Payless ShoeSource, among others.
• Ropes & Gray LLP is serving as legal advisor to Forma Brands, Ankura Consulting Group, LLC is serving as financial advisor, and Configure Partners, LLC is serving as investment banker.