Struggling under a pile of debt, Revlon has finally run out of time, forcing the business owned by billionaire Ron Perelman's MacAndrews & Forbes to file for Chapter 11 bankruptcy.

WHO: Revlon was founded in 1932 by brothers Charles and Joseph Revson and Charles Lachman with the breakthrough launch of the first opaque nail enamel, followed by coordinating lipsticks. By 1955, the brand was international. Ron Perelman gained control of the business in 1985 via a hostile takeover executed through MacAndrews & Forbes. In 2016, Revlon acquired the iconic Elizabeth Arden company and its portfolio of brands.

The company's diversified portfolio is sold in approximately 150 countries around the world in most retail distribution channels, including prestige, salon, mass, and online. The brands include Revlon, Revlon Professional, Elizabeth Arden, Almay, Mitchum, CND, American Crew, Creme of Nature, Cutex, Juicy Couture, Elizabeth Taylor, Britney Spears, Curve, John Varvatos, Christina Aguilera, and AllSaints.

WHY: Revlon has been burdened with debt listed as $3.7 billion, years of declining sales, and financial controversies. However, global supply chain issues and increased competition, combined with loans coming up for renewal, proved the tipping point for filing bankruptcy.

The Chapter 11 filing will allow Revlon to strategically reorganize its legacy capital structure and improve its long-term outlook, especially amid liquidity constraints brought on by continued global challenges, including supply chain disruption and rising inflation, as well as obligations to its lenders.

IN THEIR OWN WORDS: Debra Perelman, Revlon's President and Chief Executive Officer, said in a statement, "Consumer demand for our products remains strong—people love our brands, and we continue to have a healthy market position. But our challenging capital structure has limited our ability to navigate macro-economic issues in order to meet this demand. By addressing these complex legacy debt constraints, we expect to be able to simplify our capital structure and significantly reduce our debt, enabling us to unlock the full potential of our globally recognized brands."

DETAILS:

• Revlon filed for Chapter 11 bankruptcy protection in the Southern District of New York, listing assets totaling $2.3 billion as of late April, and debts of $3.7 billion. 
• Revlon has lined up $575 million of debtor-in-possession financing from existing lenders to fund itself during bankruptcy. 
• The total number of creditors is estimated to be between 10,001 and 25,000. The largest creditor is US Bank, National Association Global Corporate Trust Services, which is claiming $442.5 million.
• According to the filing, none of Revlon's international operating subsidiaries are included in the US Chapter 11 proceedings, with the exception of Canada and the UK. 
• Revlon's sales fell 22% in 2021 from its 2017 levels, and shares have fallen more than 80% since the beginning of the year.
• The filing said the company is currently unable to fill almost one-third of customer demand for its product.
• Perelman's MacAndrews & Forbes acquired Revlon in a hostile takeover in 1985 and went public 11 years later.
• PJT Partners is acting as financial advisor to Revlon, and Alvarez & Marsal is acting as restructuring advisor.