Revlon Inc’s bankruptcy attorneys said in court on Thursday that the cosmetics company is engaging with possible purchasers as a way to exit from Chapter 11 as quickly as possible.
Revlon attorney Paul Basta told US Bankruptcy Judge David Jones in Manhattan that the company is ready to move onto the next stage of its bankruptcy after stabilising its relationship with vendors and completing a long-term business plan.
Revlon is exploring a possible sale of the company and has begun sending nondisclosure agreements to interested bidders, Basta said. Revlon junior creditors argued in court that rushing toward a sale before the 2022 holiday season would only benefit senior lenders who forced the company to accept unrealistic deadlines as part of Revlon’s $1.4 billion bankruptcy loan.
That court-approved loan requires Revlon and its lenders to reach a bankruptcy restructuring agreement by mid-November, which does not leave enough time for stakeholders to review Revlon’s new business plan or offer a realistic path for rehabilitating the company, according to Robert Stark, a lawyer for the junior creditors.
“We have a very big and complicated mess on our hands,” Stark said. “It is not going to get done in two weeks.”
Basta said that exiting bankruptcy quickly is “of paramount importance” because of the high fees the company is incurring.
Revlon has until Jan. 19 to formally propose the bankruptcy plan.
Junior creditors intend to file a legal challenge on Monday a 2020 restructuring that allowed Revlon to take on more debt while transferring its brands and intellectual property assets to a different Revlon subsidiary, Stark said. If successful, the challenge would remove some of the senior lenders’ influence over the company’s bankruptcy restructuring.
By Dietrich Knauth; Editors: Alessandra Rafferty and Marguerita Choy
What Went Wrong at Revlon
It was a slow decline for the 90-year-old company, which found itself crippled by massive debt, a pandemic, supply chain issues and growing competition from start-up brands changing beauty ideals and culture.