Court approves $1.4 billion bankruptcy financing for Revlon

Revlon received approval from a US bankruptcy judge on Monday to proceed with a $1.4 billion loan. Subordinated creditors have argued that onerous terms could hamper their chances of extracting anything from the company’s bankruptcy and bringing the cosmetics business back. U.S. Bankruptcy Judge David Jones in Manhattan ordered a loan modification in response to subordinate creditor concerns, but LeBron must be allowed to borrow the money he needs to keep his business bankrupt.

The judge’s approval also binds LeBron to non-monetary terms, including a deadline for him to emerge from bankruptcy by April 2023 on lender-friendly terms. Jones ordered several changes to the loan agreement, gave LeBron time to come up with a restructuring plan, and authorized junior creditors to sue on LeBron’s behalf. Subordinated creditors could sue its BrandCo lenders behind the new loan. They allege that these lenders have already “harvested” Revlon’s stakeholders in a 2020 debt restructuring that used Revlon’s intellectual property as collateral.

Revlon filed for Chapter 11 in June, saying its $3.5 billion in debt meant it lacked the cash to make timely payments to key players in the cosmetics supply chain. To strengthen its supply chain and fund the bankruptcy filing, Revlon sought additional financing from a coalition called BrandCo Lenders, which loaned Revlon $1.88 billion in the years before the bankruptcy filing. Jones allowed LeBron to borrow $375 million early in the bankruptcy. On Friday, $200 million to $1.05 billion in additional funds will be released, some of which will be used to pay off LeBron’s existing debt to BrandCo lenders.

The 2020 deal has already been the subject of lawsuits from other LeBron lenders. BrandCo’s lenders argued the 2020 deal would keep LeBron alive during the worst of the COVID-19 pandemic and make him “fraudulent.” It was neither “aggressive” nor “aggressive”.

Summary of news:

  • Court approves $1.4 billion bankruptcy financing for Revlon
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