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Revlon Inc (NYSE: REV) on Monday received approval from a US bankruptcy judge to proceed with a $1.4 billion loan over an objection by junior creditors who argued that its onerous terms could block their chance to recover anything from the cosmetic company’s bankruptcy.
US Bankruptcy Judge David Jones in Manhattan ordered amendments to the loan in response to the junior creditors’ concerns but said the makeup giant must be allowed to borrow the cash it needs to continue its operations in bankruptcy.
Revlon filed for Chapter 11 in June, saying its $3.5 billion debt load left the company cash strapped to make timely payments to critical vendors in its supply chain.
The cosmetic giant sought additional financing from a coalition known as the BrandCo Lenders, which had provided a loan of $1.88 billion in the years before Revlon filed for bankruptcy.
Jones allowed Revlon to borrow $375 million in June.
Friday’s approval would be used to pay Revlon’s existing debts to BrandCo lenders.
The judge’s approval also commits Revlon to non-financial conditions, including a schedule for exiting bankruptcy by April 2023 on terms favorable to the lenders.
Jones ordered some changes to the loan agreement, giving Revlon more time to propose a restructuring plan and giving junior creditors more authority to bring lawsuits on Revlon’s behalf.
Picture Credit: WSJ
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