Forma Brands, the parent company of beauty giant Morphe, has announced the initiation of voluntary Chapter 11 proceedings in the US Bankruptcy Court, as well as the decision to accept an acquisition deal.
In a release, the firm said its holding company FB Debt Financing Guarantor has entered into a definitive asset purchase agreement with a group of secured lenders, which will acquire all of Forma Brands’ assets.
Forma hopes that the proposed transaction will significantly strengthen its financial position, while also providing additional support to carry out its long-term growth strategy, centred around wholesale and e-commerce operations.
The move comes less than one week after Morphe confirmed it would be shutting its US retail stores after rumours of the closures began circulating on social media.
Forma, which also owns the likes of Jaclyn Cosmetics and Playa Beauty, noted that its product development initiatives, brand launch plans and marketing collaborations will go ahead, as will the sale of its products via its online platforms, international Morphe stores and at select retailers.
Acquisition to cover retail network, wholesale and e-commerce
To facilitate the sale process, Forma said its domestic direct and indirect subsidiaries had followed through with a voluntary Chapter 11 filing in the District of Delaware.
The company has further received a commitment for around 33 million dollars in debtor-in-possession financing from the incoming investor group, which will be utilised to support the business and its operations throughout the process.
Commenting on the matter, Simon Cowell, president of Forma Brands, said: "Over the last year, Forma Brands has been implementing initiatives to stabilise our business and reposition our organisation for long-term growth.
“This agreement is a testament to the strength of our brands most meaningful to our consumers, including Morphe and Morphe 2.
“We will have additional financial resources available to invest in our multi-category portfolio, product launches and innovative brand and marketing strategy as we advance our vision to inspire creativity, promote inclusivity and connect with consumers around the world through beauty.”