Once valued at $21 billion, Avon has filed for Chapter 11 bankruptcy to address debt and mounting lawsuits claiming its talc products cause cancer.
Avon, the legendary beauty products seller, has filed for Chapter 11 bankruptcy as it seeks to manage its debts and legal challenges related to lawsuits over its talc-based products. These lawsuits allege that Avon’s talc products were contaminated with substances known to cause cancer, leading to significant financial liabilities for the company.
Although Avon no longer sells products in the U.S. after divesting its North American business in 2016, the holding company still oversees the brand’s operations in markets outside the United States. Avon remains a well-known name globally, recognized for its cosmetics, skincare, perfumes, and personal care products, which have traditionally been sold by a network of door-to-door sales representatives.
In a press release, John Dubel, Chair of Avon Products, stated, “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.” He emphasized that this move is intended to streamline the company’s obligations while extracting value from its remaining assets.
Kristof Neirynck, CEO of Avon, reiterated the company’s commitment to its international business strategy. He highlighted efforts to modernize Avon’s direct selling model and revitalize the brand to drive 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,” Neirynck said.
The bankruptcy proceedings exclude Avon’s operations outside the U.S., which will continue as usual during this process. This means that in markets outside of the United States, Avon’s business activities will remain uninterrupted, and the brand will continue its efforts to grow and evolve in these regions.
Natura & Co., a Brazilian company that acquired Avon in 2020, has entered into an agreement to purchase the equity interests in Avon’s non-U.S. operations for $125 million. This purchase will be conducted through a credit bid, which is subject to a court-supervised auction process. Additionally, Natura has committed up to $43 million in financing, pending court approval, to provide Avon with the necessary liquidity to meet its obligations throughout the sale process.
It’s important to note that The Avon Company, which operates the Avon brand in the U.S. and is managed by LG Household & Health Care Ltd., is not affiliated with the other Avon entities involved in the bankruptcy proceedings and is not part of the Chapter 11 filing. As such, The Avon Company in the U.S. will continue its operations unaffected by these developments.
