According to industry insiders, cosmetics maker Revlon is bracing itself for a bankruptcy filing. The Wall Street Journal reports that the company is expected to file for chapter 11 protection in the coming weeks.
The news immediately caused the REV stock to drop by 50% on Friday. It closed at $1.90 in extended trading, which is an all-time low for a once prosperous company.
Revlon brass has been trying to avoid chapter 11 filing for a while now and has had several meetings with lenders in recent weeks. The goal was to find a solution to mounting debts and tight deadlines in order to keep business alive. As of now, the company isn’t optimistic but leaves room for some last-minute relief.
Over the years, Revlon has mounted a massive debt that reached $3.31 billion in March. Meanwhile, the company struggled to maintain the desired level of sales in recent years due to increased competition from brands that are more focused on digital sales rather than the traditional way of doing business. The pandemic certainly didn’t help, putting another dent in their revenue. It also didn’t help that Revlon faces issues with the supply chain and increasing costs of production.
This isn’t the first time Revlon faced Chapter 11 filing. The company narrowly avoided bankruptcy in 2020 when it managed to get bondholder support and rework its debt.