Traders in Revlon have accused the battling splendor company of “pillaging” intellectual home it experienced pledged as collateral for a $1.eight billion mortgage as aspect of a “brazen” scheme to elevate new funds.
In a lawsuit filed Wednesday, UMB Bank, the administrative agent for the lenders, stated the collateral, which includes emblems and other legal rights related with “many of the greatest recognized, properly-recognized splendor manufacturers in the planet,” has been “ripped away and pledged to other lenders.”
Revlon secured the $1.eight billion mortgage in 2016 to support finance its acquisition of the iconic Elizabeth Arden brand name. Considering the fact that that offer, its business has been strike by the shift to on line shopping and, these days, the coronavirus pandemic, which remaining it going through a monetary storm previously this 12 months.
“This circumstance is a stark example of a borrower that has disregarded frequently its lawful obligations to its lenders,” the match claims. “Covid-19 is no license to breach contractual commitments to lenders, to interact in clear vote rigging, and to steal and reuse collateral for option uses.”
In accordance to The Wall Road Journal, UMB signifies lenders like Brigade Funds Management, HPS Financial investment Associates, and Symphony Asset Management that “have put in months resisting Revlon’s restructuring practices.”
In a assertion, Revlon stated the group experienced “repeatedly resorted to baseless accusations in an endeavor to enrich them selves and damage the company by blocking Revlon from performing exercises its contractual legal rights to safe the financing vital to execute our turnaround approach and navigate the Covid-19 disaster.”
The match alleges Revlon at first siphoned off aspect of the collateral for the 2016 mortgage to safe a $200 million mortgage in 2019 from Ares Management, giving the new financial institution “its possess, unique protection fascination in the really exact same home.”
The company then allegedly negotiated a “bigger, bolder transaction” in May 2020 that raised another $880 million and was “devastating” for the 2016 lenders.
To full the offer, the match claims, Revlon devised an end-operate all over the consent threshold by arranging a “sham” revolver mortgage with pleasant buyers who supplied the bulk needed to approve the new financing.
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