Revlon’s lenders have hammered out a deal to take over the company, according to documents filed with the U.S. Bankruptcy Court in the Southern District of New York.
The restructuring support agreement provides $44 million for unsecured creditors that might not otherwise have been paid.
A judge must approve the settlement by April 17, according to court papers. The beauty company runs Revlon and Elizabeth Arden.
Saddled with debt, slow to adapt to new market realities and losing share, Revlon was ill-equipped to deal with the supply chain troubles that helped decimate its inventory.
In June the company filed for bankruptcy and in October was delisted from the New York Stock Exchange. Before and after its bankruptcy, the company said it was evaluating a sale and other opportunities.
Revlon now has an end date for its Chapter 11 proceeding, with a result that Jim Van Horn, partner and bankruptcy attorney at Barnes & Thornburg, said “appears to be a very comprehensive, well-thought out, likely very heavily negotiated plan.” If the court approves it, which is likely, it resolves the many issues in dispute, including some that had been in litigation, Van Horn said.
Still, Revlon’s future remains uncertain.
Stockholders would likely have no equity left, Van Horn noted. That includes Ron Perelman, who took over the company in a leveraged buyout in the 1980s and remained majority shareholder. A buyer may yet come along, and the company could proceed in a variety of ways.
“If this plan gets approved, and the lenders are the new owners of the company, they, just like any owner of any company can decide what is its best business model,” Van Horn said by phone. “They can shut the company down and just sell the brands off. It can keep everything together. It can license the brands, whatever it wants to do.”
Any new owner, whether it’s the parties set to take over in April or a new suitor, would have to invest in new technologies and research and development in order to compete with rivals like L’Oréal, Apoorva Bajaj, practice head at GlobalData, said in a September research note.