Morphe parent files for bankruptcy, ends deal with Grande's r.e.m.
Forma Brands, the beauty company that made the most of influencer culture, has filed for Chapter 11 bankruptcy protection in the US and is being taken over by its lenders.
The company behind the Morphe brand and the licensee of Ariana Grande’s r.e.m. label said that its direct parent company, FB Debt Financing Guarantor LLC, has entered into a definitive asset purchase agreement with an entity including Jefferies Finance and Cerberus Capital Management.
It said that “substantially all of Forma Brands' assets will be acquired” and the proposed transaction is expected to “significantly strengthen” its financial position and “provide additional support for the execution of its long-term growth strategy, which will focus largely on the company's global wholesale and e-commerce operations”.
But it look like r.e.m won’t be part of the deal. Bloomberg reported that Forma plans to end its licensing agreement with Grande’s brand, citing court documents. The news group had previously reported that the brand’s sales had disappointed, “according to a former employee who asked not to be identified”.
Forma added that 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”.
Customers will also be able to continuing shopping its portfolio of brands through their online platforms, at speciality retailers and through the company's international Morphe retail stores. Earlier this month it had emerged that the company was closing all of its US stores.
Simon Cowell, the former Body Shop and Bare Escentuals exec who’s President of the business, said: “Over the last year, Forma Brands has been implementing initiatives to stabilise our business and reposition our organisation 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.”
He added that the company sees opportunities ahead for its brands outside the US.
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.
In connection with all this, it has appointed Stephen Marotta as Chief Restructuring Officer. He’s a senior MD at Ankura Consulting Group with more than 35 years of financial restructuring experience. He previously previously served as Chief Restructuring Officer at
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