Avon Products Inc. Files for Chapter 11 Bankruptcy

The Avon saga continues.

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Avon Products Inc., a U.S.-based nonoperational holding company of the Avon beauty brand, has filed for Chapter 11 bankruptcy in a Delaware court amid its mounting pile of debt linked to talc-related lawsuits that allege its products caused cancer, its Brazilian parent company Natura & Co. said late Monday.

API has not sold products in the U.S. since it divested its North America business in 2016, but remains the holding company of the brand’s non-U.S. operating entities.

The Avon brand in the U.S. is owned by LG Household & Health Care Ltd., and is not affiliated with any other Avon entity and is not part of the Chapter 11 proceedings.

No impact is expected on Avon’s operations outside the U.S., which are not part of the Chapter 11 proceedings. This includes the operations in the Latin America markets where the Avon brand is distributed by Natura.

Kristof Neirynck, chief executive officer of Avon, said: “We remain focused on advancing our business strategy internationally, including modernizing our direct selling model and reigniting the brand to accelerate growth.”

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Like Johnson & Johnson, API is facing hundreds of lawsuits over its talc products and has racked up $225 million of costs defending personal injury lawsuits and settlement payments. To date, its debt is hovering around $1.3 billion.

In a notice to investors, Natura & Co. said it will provide $43 million in debtor-in-possession financing and will also make a $125 million bid to acquire Avon’s operations outside the U.S. through a court supervised auction process.

Still, it appears a separation of sorts remains top of mind.

John Dubel, API’s chairperson, said: “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.”

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