Revlon is preparing to file for bankruptcy: sources

COSMETICS giant Revlon is preparing to file for Chapter 11 bankruptcy as soon as next week as it battles supply chain problems and a heavy debt load, according to people with knowledge of the matter. 

Talks around the potential filing are not final and could change, said the people, who asked not to be named discussing private negotiations. A representative for Revlon declined to comment. 

Distressed debt news provider Reorg first reported on the potential bankruptcy. Revlon’s shares plunged 53 per cent, the biggest 1-day drop on record, on Friday to close at US$2.05. 

New York-based Revlon, owned by billionaire Ron Perelman’s MacAndrews & Forbes, struggled amid competition from Estee Lauder and a host of smaller companies using social media to lure customers. Sales had been declining years before the pandemic, which also hit the company hard. 

Revlon’s chief executive officer Debra Perelman said in a May call to discuss quarterly results that demand for the company’s products was strong, but “supply chain challenges are putting pressures on our ability to meet this demand” and inflation was denting margins. 

The company has more than US$3 billion of long-term debt, and has narrowly averted multiple defaults by cutting debt deals with creditors. Its annual interest expense was nearly US$248 million last year, and it reported US$132 million of liquidity as of March 31. 

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Revlon is talking with creditors and equity ownership of the firm is likely to change, one of the people said. 

Revlon has more than 15 brands, including Elizabeth Arden and Elizabeth Taylor, which it markets in nearly 150 countries.