Avon Files for Bankruptcy During Legal Battles Over Talc Products

Iconic beauty brand Avon has filed for bankruptcy in the United States. According to reports from SE, the filing was made by Avon Products Inc. (API), a subsidiary of Brazilian cosmetics giant Natura & Co., under Chapter 11 of the U.S. Bankruptcy Code.

Issues with Talc in Avon Products

This legal move allows the company to continue operations while reorganizing under court supervision.

The bankruptcy filing is largely a consequence of a flood of lawsuits related to the use of talc in Avon products, which plaintiffs claim caused cancer. Forbes reports that API is burdened with over $1.3 billion in debt, including $78 million linked to these lawsuits.

Despite the bankruptcy, Natura plans to buy back Avon’s international operations, excluding the U.S., for $125 million after the bankruptcy proceedings.

Shedding Financial Liabilities

This acquisition could allow Natura to regain control of Avon’s global business while shedding some of its financial liabilities.

However, the bankruptcy highlights deeper, longstanding issues within Avon, such as its struggle to adapt to a rapidly changing market.

In Poland, Avon Cosmetics Polska, established in 1992, remains the country’s largest direct sales company with a vast network of 245,000 consultants.

The Polish branch assures that operations continue as usual, unaffected by the U.S. proceedings. The company also refutes the claims related to the talc controversy, emphasizing that the lawsuits pertain to products sold in the U.S. before 2016.

Avon Poland stresses that its products are safe, meeting all regulatory standards and undergoing rigorous testing.