Avon Products Files for Bankruptcy to Wrangle Talc Lawsuits (1)

Avon Products Inc., owner of the beauty brand known for its door-to-door saleswomen, filed for bankruptcy after facing a wave of lawsuits alleging talc in its products caused cancer.

The company filed for Chapter 11 in Delaware on Monday as it seeks to address 386 individual talc-related cases, according to its petition.

The firm has already incurred in $225 million of costs defending personal injury lawsuits and settlement payments and doesn’t have “sufficient liquidity to litigate and/or settle” the cases, its Chief Restructuring Officer Philip Gund said in court filings. The company expects the number of lawsuits “will only continue to increase absent a permanent solution.”

Avon Products is the latest company to seek bankruptcy in order to deal with lawsuits stemming from the sale of talc products. Most notably, Johnson & Johnson has tried to settle with plaintiffs using bankruptcy multiple times and is yet to succeed.

Avon Products is a holding company that sold its US operations in 2016, according to a separate statement. The now-bankrupt entity owns the brand outside the US and its international business. It has $1.3 billion of debt mostly owed to Brazil-based Natura & Co, which acquired it in 2020, it said in court documents.

As part of the Chapter 11 filing, Avon Products’s assets will be marketed, with Natura offering to buy it for $125 million in the absence of higher offers. As part of its bid, the Brazilian company will write off $530 million of debt it’s owed and provide an additional $43 million to fund the bankruptcy, according to the filings.

The Avon brand in the US is owned currently by LG Household & Health Care Ltd. and is not part of the bankruptcy. The international operations aren’t part of the bankruptcy and are operating as usual, according to the statement.

Read More: Avon Talc Verdict Grows to $50 Million With Punitive Damages

The bankruptcy is AIO US Inc., 24-11836, US Bankruptcy Court for the District of Delaware.

(Updates with court filings from second paragraph.)

To contact the reporters on this story:
Jeremy Hill in New York at jhill273@bloomberg.net;
Jonathan Randles in New York at jrandles5@bloomberg.net;
Lucca de Paoli in London at gdepaoli1@bloomberg.net

To contact the editors responsible for this story:
Natalie Harrison at nharrison73@bloomberg.net

Jiyeun Lee, Luca Casiraghi

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