June 21, 2024

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Revlon Accused of Fraud Over $1.8B Loan

Buyers in Revlon have accused the battling natural beauty firm of “pillaging” mental house it experienced pledged as collateral for a $one.8 billion financial loan as aspect of a “brazen” plan to elevate new funds.

In a lawsuit filed Wednesday, UMB Financial institution, the administrative agent for the creditors, claimed the collateral, which includes trademarks and other legal rights affiliated with “many of the most effective regarded, effectively-proven natural beauty brand names in the globe,” has been “ripped away and pledged to other creditors.”

Revlon secured the $one.8 billion financial loan in 2016 to enable finance its acquisition of the iconic Elizabeth Arden brand. Because that offer, its business has been strike by the shift to on-line shopping and, these days, the coronavirus pandemic, which remaining it going through a financial storm before this yr.

“This circumstance is a stark instance of a borrower that has ignored continuously its authorized obligations to its creditors,” the match suggests. “Covid-19 is no license to breach contractual commitments to creditors, to have interaction in clear vote rigging, and to steal and reuse collateral for alternative functions.”

In accordance to The Wall Street Journal, UMB represents creditors like Brigade Funds Administration, HPS Expense Associates, and Symphony Asset Administration that “have put in months resisting Revlon’s restructuring strategies.”

In a assertion, Revlon claimed the team experienced “repeatedly resorted to baseless accusations in an endeavor to enrich by themselves and hurt the firm by blocking Revlon from training its contractual legal rights to protected the funding vital to execute our turnaround tactic and navigate the Covid-19 disaster.”

The match alleges Revlon initially siphoned off aspect of the collateral for the 2016 financial loan to protected a $200 million financial loan in 2019 from Ares Administration, providing the new financial institution “its have, special safety interest in the incredibly same house.”

The firm then allegedly negotiated a “bigger, bolder transaction” in Could 2020 that elevated one more $880 million and was “devastating” for the 2016 creditors.

To total the offer, the match suggests, Revlon devised an conclusion-operate all-around the consent threshold by arranging a “sham” revolver financial loan with welcoming buyers who offered the the vast majority wanted to approve the new funding.

Tommaso Boddi/Getty Photos for Beautycon

Ares Administration, natural beauty, coronavirus, Elizabeth Arden, Revlon, UMB Financial institution