Revlon shareholders seek official representation in bankruptcy case

Revlon signage is displayed at a Boots store in London, Britain June 16, 2022. REUTERS/Hannah McKay

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  • Shareholder group fears lenders will crush equity value
  • They say Revlon is more than “meme stock”
  • Revlon’s stock price has quadrupled since the company began bankruptcy

(Reuters) – A group of Revlon Inc shareholders asked a bankruptcy judge on Tuesday to give them a bigger voice in the cosmetics company’s bankruptcy, saying no one else could be trusted to defend shareholders minority.

The shareholder group, led by investment adviser and minority Revlon shareholder Mittleman Brothers LLC, said Revlon’s equity continued to rise in value despite the bankruptcy filing, showing Revlon’s business remained healthy. and that shareholders could be “in the money” if their interests are protected. . The shareholders asked US bankruptcy judge David Jones in Manhattan to appoint an official committee to represent the minority shareholders.

Revlon did not immediately respond to a request for comment.

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Revlon filed for Chapter 11 in June, saying its $3.5 billion in debt left it too cash-poor to make timely payments to critical suppliers in its cosmetics supply chain.

Revlon shares have quadrupled in value since filing for bankruptcy, rising to $8.38 per share on Tuesday afternoon from $1.95 per share on June 16, representing a market capitalization of $457 million, said shareholders.

Shareholders often see their equity wiped out in bankruptcy, but the recent bankruptcy of Hertz Inc showed that shareholders can retain significant value when bankruptcy is prompted by short-term, resolvable issues, shareholders said in a court record.

Hertz, like Revlon, was initially dismissed as a “meme action”, with skeptics blaming its price hike on retail investors placing irrational bets on a company that has received social media attention. But Revlon is more than a “meme stock,” it’s “an iconic 90-year-old American brand that’s simply facing short-term liquidity issues as a result of the COVID-19 pandemic,” wrote the group of shareholders.

Without a bigger voice in the bankruptcy case, Revlon may show “favoritism” to other creditors who have a stake in the case, particularly a group known as the BrandCo Lenders, which offered Revlon a $1.4 billion loan to shore up its supply chain and carry out a Chapter 11 restructuring, shareholders said.

Jones approved this loan on August 1, despite objections from junior creditors who worried about the power he was giving to BrandCo lenders.

Shareholders asked Jones to rule on their claim at a court hearing on August 24. Formal equity committees are rarely approved in bankruptcy cases.

The case is In re Revlon Inc, US Bankruptcy Court for the Southern District of New York, No. 22-10760.

For Revlon: Paul Basta, Robert Britton and Alice Belisle Eaton of Paul, Weiss, Rifkind, Wharton & Garrison

For minority shareholders: Thomas Lauria and Gregory Pesce of White & Case

For the ad hoc committee of BrandCo lenders: Eli Vonnegut

by Davis Polk & Wardwell; and Danielle Rose of Kobre & Kim

Read more:

Revlon files for bankruptcy and blames supply chain issues

Citigroup urges appeals court to ‘rewind’ after Revlon mistake

Revlon borrows $375 million in bankruptcy to shore up its supply chain

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Reporting by Dietrich Knauth

Our standards: The Thomson Reuters Trust Principles.

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