Revlon restructures using US bankruptcy provision amid macroeconomic turbulences
16 Jun 2022 --- Revlon has voluntarily filed for Chapter 11, a reorganization bankruptcy where it will continue to operate in all markets while driving future growth. The petition was filed in the US Bankruptcy Court, New York. This blow is a result of the global supply chain strains and increasing inflation.
The company expects to receive US$575 million in debtor-in-possession (DIP) financing, which will help provide daily operations liquidity. Of the amount, US$75 million is to be used to resolve its foreign debt, says the company.
“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 to meet this demand,” explains Debra Perelman, president and CEO at Revlon.
The Chapter 11 filing enables Revlon to reorganize its capital structure and enhance its long-term approach, focusing on liquidity constraints brought by continued global challenges and obligations to its lenders.
Notably, the company states that none of Revlon’s international operating subsidiaries are included in US Chapter 11 proceedings, except Canada and the UK.
Addressing the debts
The receipt was subject to court approval which is why the company expects to receive DIP financing from its “existing lender base.”
“Today’s 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,” comments Perelman.
The Chapter 11 filing enables Revlon to reorganize its capital structure and enhance its long-term approach.
“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 recognized brands.”
In May, Revlon was reportedly pushing through macroeconomic headwinds caused by unforeseen supply chain issues induced by the COVID-19 pandemic.
Running the company
Revlon will continue running through its management team following its filing.
“We are committed to ensuring the reorganization is as seamless as possible for our key stakeholders, including our employees, customers and vendors, and we appreciate their support during this process,” assures Perelman.
Revlon explains that the reorganization process includes filing “First Day” motions to allow it to maintain its operations. It also intends to pay employees as usual and continue providing primary benefits. This includes paying vendors and partners under customary terms for goods and services received during the filing process.
The company also expects to receive court approval for all of its routine requests.
Edited by Venya Patel
