Avon Files for Bankruptcy in US Amid Mounting Talc Lawsuits

Avon catalogs are on display outside an Avon store in New York City in this this file photo. Mario Tama/Getty Images

The owner of cosmetics giant Avon has filed for bankruptcy in an effort to resolve mass lawsuits alleging talc powder in its products contained cancer-causing asbestos.

Avon Products Inc. (API), a U.S.-based non-operational holding company of the Avon beauty brand, filed for voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware on Aug. 12, according to a press release.

While API has not sold products in the United States since it divested its North American business in 2016, it remains the holding company of the brand’s non-U.S. operating entities.

According to the press release, Brazil-based Natura, which bought Avon in 2020, has agreed to buy the equity interests in Avon’s non-U.S. operations for $125 million in a credit bid that will be subject to a court-supervised auction process.

It has also agreed to provide up to $43 million in proposed financing during the bankruptcy.

In a statement, API Chairman John Dubel said the bankruptcy filing and proposed sale of Avon’s non-U.S. operations will “maximize the value of our assets and enable us to address our obligations in an orderly manner.”

Avon’s operating businesses outside the United States are not part of the bankruptcy proceedings, according to the press release, which notes that it’s “business as usual in Avon’s international markets.”

Additionally, the press release noted that the Avon Company, which is the Avon brand in the United States and is currently operated by LG Household & Health Care Ltd., is not affiliated with any other Avon entities and is not part of the Chapter 11 bankruptcy proceedings.

Avon CEO Kristof Neirynck said the beauty giant remains “focused on advancing our business strategy internationally, including modernizing our direct selling model and reigniting the brand to accelerate growth.”

Neirynck added that the company has nearly two million representatives around the world.

Avon, which was founded in New York in 1886, became a household name thanks to its legions of door-to-door salespersons, with the company selling everything from skincare to perfume.

However, in 2010, the cosmetics giant faced its first legal claim alleging its talc products were contaminated with asbestos. Hundreds more were filed in 2020.

According to court documents, the beauty brand currently faces 372 talc-related lawsuits, despite “a significant effort” to resolve the cases.

The company has said that while it believes the talc claims are without merit, it does not have “sufficient liquidity to litigate and/or settle hundreds of cases,” and expects that the number of cases filed against it “will only continue to increase absent a permanent solution.”

Elsewhere, Avon said in court documents that its total debts include $1.29 billion owed to lenders and bondholders.

The bankruptcy filing comes after a Los Angeles jury in 2022 ordered Avon to pay more than $50 million to an Arizona woman who claimed the company’s products contained cancer-causing asbestos and were to blame for her mesothelioma, a cancer of the thin tissue that lines the body’s internal organs.

In July, the company was ordered to pay $24.4 million to a Chicago man who was also diagnosed with mesothelioma after allegedly using the company’s talc powder.