Avon Products Inc. has filed for Chapter 11 bankruptcy protection in Delaware to address over $1 billion in liabilities, including numerous injury claims related to talc in its products. The iconic beauty company, alongside three affiliates, submitted its bankruptcy petitions late Monday, citing financial distress and ongoing litigation as key factors driving the decision.
Avon Products Files for Chapter 11 : Talc-Related Lawsuits and Financial Woes
Avon Products filed for Chapter 11 in response to hundreds of pending lawsuits alleging that its talc-based products caused asbestos exposure, leading to severe health issues such as mesothelioma. The company faces approximately 386 pending injury claims, with notable cases including a $24 million verdict in Illinois and a $46 million liability from a California verdict in 2022. Avon has already incurred $225 million in defense costs, according to court filings.
“Although the debtors believe the talc claims are without merit, the debtors do not have sufficient liquidity to litigate and/or settle hundreds of cases and expect that the number of cases filed against the debtors will only continue to increase absent a permanent solution,” said Philip Gund, Avon’s Chief Restructuring Officer, in his declaration.
Sale of Non-U.S. Operations to Natura & Co.
As part of its restructuring efforts, Avon announced an agreement to sell its non-U.S. operations to Brazil-based Natura & Co., which acquired the company in 2020. The deal involves a $125 million credit bid, with Natura also agreeing to provide $43 million in Chapter 11 financing to support Avon’s bankruptcy process.
