01.12.23
Beauty incubator Forma Brands, which owns Morphe, Ariana Grande’s R.E.M. Beauty, Lipstick Queen and more, has filed for Chapter 11 Bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.
The company has reportedly been considering bankruptcy since October of last year. Sources blame the pandemic, which caused a two-year slide in color cosmetics sales, supply chain issues, as well as controversy surrounding celebrity brands from Jeffree Star and James Charles.
Direct parent company, FB Debt Financing Guarantor, LLC, has entered into a definitive asset purchase agreement with a group of secured lenders, under which substantially all of Forma Brands' assets will be acquired.
The agreement with the Investor Group includes Forma Brands' wholesale operations, online platforms and international Morphe retail stores.
Simon Cowell, President of Forma Brands, said, "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. We will have additional financial resources available to invest in our multi-category portfolio, product launches and innovative brand and marketing strategy as we advance our vision to inspire creativity, promote inclusivity and connect with consumers around the world through beauty. We appreciate the continued support of our financial partners and believe this is the best path forward for Forma Brands as we position the business for the long term."
Cowell continued, “We thank our stakeholders for their continued support, including our global creators, influencers, affiliate and retail partners and our vendors and suppliers, all of whom play a key role in helping us curate the next generation of beauty brands and products. I also extend my deepest appreciation to our team members for their commitment to Forma Brands and for always going the extra mile to deliver thoughtfully selected products to our consumers."
Forma Brands has filed a number of customary motions seeking court approval to continue supporting its operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption. Forma Brands expects to receive approval for these requests.
The company has reportedly been considering bankruptcy since October of last year. Sources blame the pandemic, which caused a two-year slide in color cosmetics sales, supply chain issues, as well as controversy surrounding celebrity brands from Jeffree Star and James Charles.
Direct parent company, FB Debt Financing Guarantor, LLC, has entered into a definitive asset purchase agreement with a group of secured lenders, under which substantially all of Forma Brands' assets will be acquired.
The agreement with the Investor Group includes Forma Brands' wholesale operations, online platforms and international Morphe retail stores.
Goals Moving Forward
Forma Brands says it remains committed to collaborating with its global creators and partners to enable its family of brands to bring next-generation beauty products to new and existing audiences. The company's product development initiatives, brand launch plans and marketing collaborations remain in place.Simon Cowell, President of Forma Brands, said, "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. We will have additional financial resources available to invest in our multi-category portfolio, product launches and innovative brand and marketing strategy as we advance our vision to inspire creativity, promote inclusivity and connect with consumers around the world through beauty. We appreciate the continued support of our financial partners and believe this is the best path forward for Forma Brands as we position the business for the long term."
Cowell continued, “We thank our stakeholders for their continued support, including our global creators, influencers, affiliate and retail partners and our vendors and suppliers, all of whom play a key role in helping us curate the next generation of beauty brands and products. I also extend my deepest appreciation to our team members for their commitment to Forma Brands and for always going the extra mile to deliver thoughtfully selected products to our consumers."
Terms of the Agreement
The proposed transaction is subject to higher or better offers, court approval and other customary conditions. The company has received a commitment for approximately $33 million in debtor-in-possession financing from the Investor Group, which, subject to court approval, will be available to support the business and its operations throughout the court-supervised sale process.Forma Brands has filed a number of customary motions seeking court approval to continue supporting its operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption. Forma Brands expects to receive approval for these requests.
