Investors in Revlon have accused the having difficulties magnificence business of “pillaging” mental assets it experienced pledged as collateral for a $1.8 billion loan as part of a “brazen” scheme to elevate new funds.
In a lawsuit submitted Wednesday, UMB Lender, the administrative agent for the loan providers, stated the collateral, which consists of emblems and other rights related with “many of the very best recognised, perfectly-recognized magnificence brands in the planet,” has been “ripped away and pledged to other loan providers.”
Revlon secured the $1.8 billion loan in 2016 to enable finance its acquisition of the legendary Elizabeth Arden brand. Due to the fact that deal, its business has been strike by the change to on-line purchasing and, recently, the coronavirus pandemic, which left it going through a financial storm previously this yr.
“This case is a stark illustration of a borrower that has disregarded frequently its lawful obligations to its loan providers,” the match suggests. “Covid-19 is no license to breach contractual commitments to loan providers, to engage in transparent vote rigging, and to steal and reuse collateral for option needs.”
In accordance to The Wall Avenue Journal, UMB represents loan providers like Brigade Funds Administration, HPS Investment decision Companions, and Symphony Asset Administration that “have invested months resisting Revlon’s restructuring techniques.”
In a assertion, Revlon stated the group experienced “repeatedly resorted to baseless accusations in an attempt to enrich them selves and harm the business by blocking Revlon from performing exercises its contractual rights to safe the financing vital to execute our turnaround method and navigate the Covid-19 disaster.”
The match alleges Revlon originally siphoned off part of the collateral for the 2016 loan to safe a $200 million loan in 2019 from Ares Administration, offering the new lender “its very own, unique security curiosity in the extremely exact assets.”
The business then allegedly negotiated a “bigger, bolder transaction” in May perhaps 2020 that raised yet another $880 million and was “devastating” for the 2016 loan providers.
To finish the deal, the match suggests, Revlon devised an conclude-operate close to the consent threshold by arranging a “sham” revolver loan with friendly investors who provided the greater part required to approve the new financing.
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