Revlon files for Chapter 11 bankruptcy amid supply chain woes

Cosmetics giant Revlon is filing for Chapter 11 bankruptcy in the US, after facing supply chain issues and large debt.

The company, which also owns brands including Elizabeth Arden, Mitchum and Cutex along with fragrances by Christina Aguilera and Britney Spears, has filed voluntary petitions for reorganisation under Chapter 11 in the US Bankruptcy Court for the Southern District of New York.

Revlon has said that the filing will "allow the company to strategically reorganise its legacy capital structure and improve its long-term outlook, especially amid liquidity constraints brought on by continued global challenges".

Revlon’s management team will continue to run the business following the filing.

Upon receipt of court approval, the company expects to receive $575 million in debtor-in-possession financing from its existing lender base, which in addition to its existing working capital facility, will provide liquidity to support day-to-day operations.

Revlon intends to pay vendors and partners under customary terms for goods and services received on or after the filing date and to pay its employees in the usual manner and to continue their primary benefits without disruption.

The business reported a long-term debt of $3.3 billion, as of end of March 2022. In a financial results call in May, Revlon's CEO Debra Perelman said that while demand for the product remained strong, the company was "facing supply chain pressures to meet this demand", and that inflation was impacting margins.

Debra Perelman, Revlon's President and CEO, said: “The filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth.

“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 recognised brands."