Avon now files an unexpected Chapter 11 bankruptcy after struggling with the growth of competitor beauty brands like Ulta and Sephora.
“In addition, CVS, Target and Kohl’s have all made lower-priced beauty products more accessible, making Avon a less necessary company for the many women who once used it,” reports TheStreet.
“Avon Products, Inc. (API), a U.S.-based non-operational holding company of the Avon beauty brand, today announced that it has initiated voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware to address its debt and legacy talc liabilities,” the company said in a news release.
It’s important to note that this filing does not cover the company’s US operations.
“Note that The Avon Company, which is the Avon brand in the U.S. currently owned by LG Household & Health Care Ltd., is not affiliated with any other Avon entity and is not part of the Chapter 11 proceedings,” API said in the release.
Avon Products, Inc. also cited mounting legal costs and a lack of financial resources to handle ongoing personal injury lawsuits.
The company has already spent $225 million defending itself in these cases and expects the number of lawsuits to continue rising.
To address its financial woes, API has reached an agreement with its parent company, Natura & Co., for the sale of its non-U.S. operations.
Natura will purchase the equity interests in these operations for $125 million through a court-supervised auction process.
Natura has also pledged up to $43 million in debtor-in-possession financing, which, if approved by the court, will provide API with enough liquidity to cover its obligations during the sale process.
The Avon brand, while it has struggled globally, remains a massive brand worldwide.
“We remain focused on advancing our business strategy internationally, including modernizing our direct selling model and reigniting the brand to accelerate growth,” CEO Kristof Neirynck said in a statement.
“Since becoming CEO earlier this year, I am increasingly energized by our strengths and opportunities, supported by our valued Associates and nearly 2 million Representatives around the world.”
The company, which is also known as Avon International Operations, reported both debts and assets of between $100 million and $1 billion.
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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy
Other Economy News Today
A massive rental company with 34k locations now shuts down its operations after filing for bankruptcy and 22 years in business.
Users of movie rental company Redbox were left saddened after it was announced that it would be shutting down operations.
The announcement comes after the rental company’s parent company, Chicken Soup for the Soul Entertainment, filed for Chapter 11 bankruptcy.
According to court documents obtained by the Washington Post, the Connecticut-based company claimed to be one billion dollars in debt.
As a result, Redbox, which was a staple of many grocery stores including Walgreens, and CVS will be shuttered.
Many fans took to social media to express how upset they were with the loss.
“I knew it was coming, sadly,” UltraVada wrote in a post on X, formerly Twitter.
“It was inevitable,” a second person mourned.
“I knew this would happen when I heard they filed for Bankruptcy but its still sad to hear. I have a lot of fun memories of Redbox,” a third person lamented.
“I still don’t think this will be or ever be the end of physical media as we do still get remasters of some movies in 4k/Bluray.”
One person revealed that they had forgotten the rental service had existed.
Some users were not surprised by the announcement.
“Not surprised since nobody really rents videos anymore with the rise of streaming and what not,” one user admitted.
“Also kinda remember getting into a feud with them on here.”
One user also pointed out that the last remaining Blockbuster, located in Bend, Oregon, managed to outlive Redbox.
Redbox was acquired by Chicken Soup for the Soul Entertainment (CSSE) in 2022 and became one of the company’s flagship video-on-demand streaming services.
At its peak, CSSE operated more than 20,000 DVD rental kiosks across the country.
The company’s filing means that the company’s more than 1,000 employees will be laid off, per The Wall Street Journal.
It was also reported by Deadline that many employees at CSSE hadn’t received their paychecks and had medical benefits cut in late June.
Also Read: This Massive Mall Retailer Is Now Closing In California
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