Melissa Juried Kriebel
Some of Revlon’s creditors have asked a US bankruptcy judge to unwind the bankrupt cosmetic giant’s 2020 loan restructuring, saying that a group of senior lenders fleeced other creditors by improperly laying claim to the company’s valuable intellectual property assets.
The creditors, including Brigade Capital and Nuveen Asset Management, in a court filing have accused a separate faction of lenders, known as the Brandco lenders, of exerting enormous leverage over Revlon’s bankruptcy proceedings based on “sham” loan transactions made in 2019 and 2020.
If successful, their challenge could eliminate the Brandco lenders’ right to claim Revlon’s brands as their exclusive collateral, reducing the Brandco lenders’ leverage in the bankruptcy.
Both lender groups participated in a $2bn loan that Revlon used to purchase Elizabeth Arden in 2016. But the Brandco lenders, which include private equity and hedge funds such as Ares Management and Oak Hill Advisors, then loaned Revlon additional money and claimed more of Revlon’s assets as collateral, in violation of the 2016 loan agreement, according to the filing.
Revlon and an attorney for the Brandco lenders did not immediately respond to a request for comment. Ares declined to comment.
When Revlon filed for bankruptcy in June, the Brandco lenders held about $1.88bn of Revlon’s $3.5bn debt. They loaned the company another $975m on to fund the Chapter 11 case.
Through transactions in 2019 and 2020, Revlon transferred trademarks and other intellectual property rights associated with its beauty brands, including Elizabeth Arden, Almay and Roux, to newly created subsidiaries which took on additional, higher-priority debt than the company’s existing debts.