Nov 1 (Reuters) – A few of Revlon’s collectors have requested a U.S. chapter decide in Manhattan to unwind the bankrupt beauty large’s 2020 mortgage restructuring, saying {that a} group of senior lenders fleeced different collectors by improperly laying declare to the corporate’s helpful mental property belongings.
The collectors, together with Brigade Capital and Nuveen Asset Administration, in a courtroom submitting late Monday accused a separate faction of lenders, often known as the Brandco lenders, of exerting huge leverage over Revlon’s chapter proceedings primarily based on “sham” mortgage transactions made in 2019 and 2020.
If profitable, their problem might remove the Brandco lenders’ proper to say Revlon’s manufacturers as their unique collateral, lowering the Brandco lenders’ leverage within the chapter.
Each lender teams participated in a $2 billion mortgage that Revlon used to buy Elizabeth Arden in 2016. However the Brandco lenders, which embody non-public fairness and hedge funds akin to Ares Administration and Oak Hill Advisors, then loaned Revlon extra cash and claimed extra of Revlon’s belongings as collateral, in violation of the 2016 mortgage settlement, in accordance with the submitting.
Revlon and an lawyer for the Brandco lenders didn’t instantly reply to a request for remark. Ares declined to remark.
When Revlon filed for chapter in June, the Brandco lenders held about $1.88 billion of Revlon’s $3.5 billion debt. They loaned the corporate one other $975 million to fund the Chapter 11 case.
By means of transactions in 2019 and 2020, Revlon transferred emblems and different mental property rights related to its magnificence manufacturers, together with Elizabeth Arden, Almay and Roux, to newly created subsidiaries which took on extra, higher-priority debt than the corporate’s present money owed.
These transactions allowed Revlon to borrow a further $880 million in 2020 from the Brandco lenders, in accordance with the criticism.
The objecting lenders beforehand sued the Brandco lenders, however their lawsuit was sidetracked when Revlon’s financial institution, Citibank, mistakenly made a $900 million fee on the 2016 mortgage whereas trying to course of a $7.8 million curiosity fee.
Revlon has mentioned it’s exploring a sale of the corporate as a possible exit from Chapter 11. The corporate is working to achieve a preliminary restructuring settlement with its Brandco lenders by mid-November.
Reporting by Dietrich Knauth, Modifying by Alexia Garamfalvi and Ed Osmond
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