Revlon's complicated bankruptcy

Revlon's bankruptcy process will be complicated as past problems may throw a wrench into its reorganization.

Why it matters: The beauty brand is iconic.

The big picture: Revlon may remain whole, but Fitch's David Silverman suggests it could pursue the sale of certain brands like Elizabeth Arden, Almay and American Crew.

• Revlon hired Goldman Sachs in 2019 to pursue a sale of all, or parts of the business but felt bids were too low. Goldman, which did not respond to a request for comment, is said to still be the company's M&A adviser.

The intrigue: It's always tricky to bring previously spurned bidders back to the table. But Revlon has added challenges.

• In August 2020, Citigroup accidentally wired to lenders the $900 million balance on a term loan rather than just the interest. Ever since there's been a legal fight to get the lenders to return the money.
• Also outstanding is a 2020 lawsuit against Revlon by UMB Bank, related to the transference of intellectual property rights that served as collateral for a 2016 term loan that backed Revlon's $870 million purchase of Elizabeth Arden.

Details: It didn't help that Revlon's bankruptcy, though expected, materialized more quickly than anticipated.

• It succumbed to a heavy debt load exacerbated by supply chain disruptions (not to mention the above complications), forcing it to enter Chapter 11 protection without a prepackaged plan.
• And then there are questions about its overall business outlook, having lost market share and shelf space to upstarts like L’Oréal's NYX Cosmetics, Pixi Beauty and E.l.f. Cosmetics.

The bottom line: Revlon is the biggest bankruptcy with institutional loans since satellite operator Intelsat in 2020. It took Intelsat nearly two years to emerge, and it arguably had less legal risk on it than does Revlon.