Beauty incubator Forma Brands and its direct and indirect companies filed for Chapter 11 bankruptcy on Thursday, one week after closing all its Morphe retail locations in the United States.
According to a press release from the company, the beauty brand company has gone into a proposed acquisition arrangement with lenders including Jefferies Finance in which creditors will contribute $33 million to take over its wholesale operations, online platforms, and overseas Morphe retail stores.
According to court records, the firm started having “liquidity and operational challenges due to the COVID-19 epidemic, significant changes in consumers’ beauty habits, and their necessity to discontinue partnerships with particular influencers.” Forma’s paid principal debt and interest liabilities are about $868 million.
Simon Cowell, president of Forma Brands and the former Body Shop and Bare Escentuals executive, said in a statement, “Over the last year, FORMA Brands has been implementing initiatives to stabilize our business and reposition our organization for long-term growth. This agreement is a testament to the strength of our brands most meaningful to our consumers, including Morphe and Morphe 2.
FB Debt Financing Guarantor LLC, the direct parent company of Morphe and the r.e.m label licensee, said that it has signed a definitive asset purchase agreement with a party that includes Jefferies Finance and Cerberus Capital Management.
The proposed transaction is anticipated to “significantly strengthen” the company’s financial position and “provide additional support for the execution of its long-term growth strategy, which will focus primarily on the company’s global wholesale and e-commerce operations,” according to the statement that “substantially all of Forma Brands’ assets will be acquired.”
R.E.M, though, doesn’t appear to be a part of the agreement. According to court filings cited by Bloomberg, Forma intends to terminate its licensing arrangement with Grande’s brand. The news organization has already reported that sales were very disappointing, former employee who asked not to be identified.”
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