Legendary beauty products seller Avon files for bankruptcy
FILE - The Avon Products Inc. logo is seen on a lipstick arranged for a photograph in New York, U.S., on Tuesday, July 30, 2013. Photographer: Scott Eells/Bloomberg via Getty Images
Avon Products filed for Chapter 11 bankruptcy on Monday as the beauty brand looks to address its debt and legal liabilities stemming from lawsuits that alleged its talc-based products were contaminated with cancer-causing substances.
The holding company hasn't sold Avon products in the U.S. since it divested its North America business in 2016, but remains the holding company for the Avon brand's operating entities outside the U.S.
Avon is known for selling cosmetics, skin care, perfume and personal care products, as well as the company's door-to-door saleswomen.
"Today's action and the proposed sale of Avon's non-U.S. operations will maximize the value of our assets and enable us to address our obligations in an orderly manner," John Dubel, chair of Avon Products, said in a release.
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Avon CEO Kristof Neirynck said the company is "focused on advancing our business strategy internationally, including modernizing our direct selling model and reigniting the brand to accelerate growth. Since becoming CEO earlier this year, I am increasingly energized by our strength and opportunities, supported by our valued Associates and nearly 2 million Representatives around the world."
Avon's operations outside the U.S. are excluded from the legal proceedings and will continue to operate as normal while the process plays out.
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Natura & Co., a Brazil-based firm that acquired Avon in 2020, entered into an agreement to buy the equity interests in Avon's non-U.S. operations for $125 million in a credit bid that's subject to a court-supervised auction process.
Natura also committed up to $43 million in financing that would, subject to court approval, provide liquidity for Avon Products to cover its obligations during the sale process.
The Avon Company, which is the Avon brand in the U.S. and is operated by LG Household & Health Care Ltd., isn't affiliated with other Avon entities and isn't part of the Chapter 11 bankruptcy proceedings.