The home delivery cosmetics company Avon Products has filed for bankruptcy in the United States after being unable to assume the debt it faces.
As indicated by Europa Press, the company has voluntarily agreed to the relevant formalities and procedures to file for Chapter 11 bankruptcy protection under US law with the Bankruptcy Court of the District of Delaweare (USA) in order to deal with its debt and the legal disputes it faces in relation to the products in which it used talcum powder.
According to Bloomberg news agency, the company has more than 203 million euros in payments to defend itself against 386 personal injury claims and the talc scandal.
Avon has not marketed its products in the US since 2016, when it divested its North American business following the acquisition of Cerberus Capital. The company has therefore stated that Avon's non-US operating businesses ‘are not part of the Chapter 11 proceedings’ and everything will continue in the same way in Avon's international markets.
It should be recalled that the Brazilian group Natura & Co took over Avon last 2020 and is API's largest creditor and has expressed its confidence in AVON by announcing a commitment to finance with 39 million euros as debtor in possession, which is expected to provide sufficient liquidity to fund API's obligations during the process. Natura has also reported that it has entered into an agreement to acquire Avon's equity interests in non-US operations in exchange for 114 million euros in the form of a credit bid, subject to a court-supervised auction process.
Avon's CEO explained that despite this situation, the company remains focused on advancing its business strategy internationally, including modernising the direct sales model and restarting the brand to accelerate growth.
Avon hit by talcum powder scandal
As El Mundo points out, in December 2022, a Los Angeles jury signed a judgment forcing Avon to pay more than $50 million to an Arizona woman who claimed she was diagnosed with cancer after using cosmetics containing asbestos-contaminated talcum powder.
In July, a separate jury also ordered the company to pay a Chicago man who worked as a caretaker at an Avon manufacturing plant in Illinois more than $24 million after he was diagnosed with mesothelioma.