Natura &Co to pay millions in helping Avon’s US bankruptcy process

Natura &Co has reached a deal with Avon Products to pay US$34 million in cash to the company’s debtors’ estate as part of the company’s Chapter 11 bankruptcy process in the US.

The Brazilian beauty conglomerate will also provide US$43 million in debtor-in-possession financing to support Avon’s operations during the restructuring. 

The agreement aims to ensure Avon’s operational stability during bankruptcy proceedings. The financial commitment still requires final documentation and court approval.

In August, Avon Products filed for Chapter 11 bankruptcy protection at the US Bankruptcy Court of the District of Delaware. According to court papers, the company filed for bankruptcy due to pandemic pressures and scores of lawsuits alleging its talc products caused cancer.

Natura &Co purchased Avon four years ago and has since promised to repurchase Avon operations in Europe, Asia and Latin America. The original acquisition hoped to revitalize the company, which became famous for its door-to-door cosmetics sales, but Avon continued to face hurdles. It had issues adapting to shifting consumer preferences and digital trends.

With an ever-changing beauty landscape, brands are expected to push through the norms and keep up with the latest trends to maintain a position in the market. Avon was reportedly unable to do so. 

The bankruptcy filing underscores the competitive pressures within the beauty industry. As part of the deal, Natura has agreed to waive all secured and unsecured claims against Avon, streamlining the restructuring process.

Earlier this month, Natura reported a net loss of R$7 billion (US$1.156 billion) in the third quarter of 2024. Natura &Co also de-consolidated Avon Products due to its Chapter 11 filing at that time.