Pat McGrath Labs chooses Chapter 11 bankruptcy over brand sell-off

Pat McGrath Labs has filed for Chapter 11 bankruptcy in the US. The filing typically allows a business to work with lenders on a plan to repay debts over time, and does not necessitate the brand to close. 

The beauty unicorn was founded in 2015 and was valued at over US$1 billion in 2018. However, in court filings with the US Bankruptcy Court for the Southern District of Florida, the company listed estimated liabilities of over US$50 million.

A planned auction to sell the brand’s assets was scheduled for the end of this month, but the brand has confirmed that it has been postponed indefinitely. Instead, the Chapter 11 filing affords the brand more time and court protection to continue its business operations and meet its obligations to employees and suppliers.

The brand’s products will remain available on its online channel and from retailers Sephora and Ulta.

Claim to fame

Pat McGrath Labs was founded by its namesake makeup artist and launched with a multipurpose gold pigment that quickly rose to viral fame. In 2018, the company received US$60 million from Eurazeo Brands. Over time, Dame McGrath expanded her line into eye shadow palettes, lipsticks, and face products.

The brand became synonymous with bold makeup looks created by McGrath, often featured on high-end runways, including those of Louis Vuitton, Prada, and Gucci. In 2024, the artist collaborated with fashion house Maison Margiela and debuted a new makeup look that left models resembling glass or porcelain dolls. 

Heavy crown

There has been no official explanation as to why Pat McGrath Labs is facing financial difficulties, but industry reporting suggests that several pressures have mounted over time. 

The luxury brand operates in the premium makeup space, which is characterized by high production, formulation, and packaging costs.

Pat McGrath’s Glass 001 Artistry Mask launched a year after the “glass skin” porcelain doll makeup look appeared on the Maison Margiela runway.Moreover, the brand grew in tandem with social media’s rise. Online beauty trends are moving faster than ever before, and consumers are often impatient when waiting for viral moments to turn into product launches.

Some sources suggest that the attention Pat McGrath enjoyed following the Maison Margiela runway show in 2024 was an example of delayed action on the brand’s behalf. The makeup label debuted its Glass 001 Artistry Mask, the “glass skin” porcelain doll product from the show, a year after its online momentum, which may have limited sales. However, the product is currently sold out on the brand’s site.

Strategic red button

Filing for a Chapter 11 bankruptcy is not uncommon in the beauty world. Revlon filed for Chapter 11 in 2022 and later made a comeback. Avon also used Chapter 11 in 2024 to manage ongoing lawsuits that claimed its talc-containing products were contaminated with asbestos.

Earlier this month, Saks Global also filed for a voluntary Chapter 11 bankruptcy, and now owes millions to major beauty companies. Giants like Chanel, Kering, Estée Lauder Companies, Beiersdorf, Puig, LVMH, and Europerfumes are all in the queue, with the top 30 unsecured claims totaling roughly US$700 million.

Beyond bankruptcies, cosmetic companies are also shedding popular names amid financial difficulties. Yesterday, Personal Care Insights reported that AS Beauty is closing its makeup brands CoverFX and Mally Beauty due to rising industry costs and changes, such as tariffs.