© Reuters. FILE PHOTO: Revlon signage is seen on show in a Boots retailer in London, Britain, June 16, 2022. REUTERS/Hannah McKay
By Dietrich Knauth
(Reuters) – A few of Revlon’s collectors have requested a U.S. chapter decide in Manhattan to unwind the bankrupt beauty large’s 2020 mortgage restructuring, saying {that a} group of senior lenders fleeced different collectors by improperly laying declare to the corporate’s beneficial mental property property.
The collectors, together with Brigade Capital and Nuveen Asset Administration, in a courtroom submitting late Monday accused a separate faction of lenders, referred to as the Brandco lenders, of exerting monumental leverage over Revlon’s chapter proceedings based mostly on “sham” mortgage transactions made in 2019 and 2020.
If profitable, their problem may remove the Brandco lenders’ proper to assert Revlon’s manufacturers as their unique collateral, lowering the Brandco lenders’ leverage within the chapter.
Each lender teams participated in a $2 billion mortgage that Revlon used to buy Elizabeth Arden in 2016. However the Brandco lenders, which embody non-public fairness and hedge funds resembling Ares Administration (NYSE:) and Oak Hill Advisors, then loaned Revlon extra cash and claimed extra of Revlon’s property as collateral, in violation of the 2016 mortgage settlement, in keeping with the submitting.
Revlon and an legal professional for the Brandco lenders didn’t instantly reply to a request for remark. Ares declined to remark.
When Revlon filed for chapter in June, the Brandco lenders held about $1.88 billion of Revlon’s $3.5 billion debt. They loaned the corporate one other $975 million to fund the Chapter 11 case.
By means of transactions in 2019 and 2020, Revlon transferred logos and different mental property rights related to its magnificence manufacturers, together with Elizabeth Arden, Almay and Roux, to newly created subsidiaries which took on extra, higher-priority debt than the corporate’s current money owed.
These transactions allowed Revlon to borrow a further $880 million in 2020 from the Brandco lenders, in keeping with the criticism.
The objecting lenders beforehand sued the Brandco lenders, however their lawsuit was sidetracked when Revlon’s financial institution, Citibank, mistakenly made a $900 million fee on the 2016 mortgage whereas trying to course of a $7.8 million curiosity fee.
Revlon has stated it’s exploring a sale of the corporate as a possible exit from Chapter 11. The corporate is working to succeed in a preliminary restructuring settlement with its Brandco lenders by mid-November.
