Avon Products Files for Bankruptcy to Wrangle Talc Lawsuits

Avon Products Inc., owner of the beauty brand known for its door-to-door saleswomen, filed for bankruptcy after facing a wave of lawsuits alleging talc in its products caused cancer.

The company filed for Chapter 11 in Delaware on Monday as it seeks to address 386 individual talc-related cases, according to its petition.

The firm has already incurred in $225 million of costs defending personal injury lawsuits and settlement payments and doesn’t have “sufficient liquidity to litigate and/or settle” the cases, its Chief Restructuring Officer Philip Gund said in court filings. The company expects the number of lawsuits “will only continue to increase absent a permanent solution.”

Avon Products is the latest company to seek bankruptcy in order to deal with lawsuits stemming from the sale of talc products. Most notably, Johnson & Johnson has tried to settle with plaintiffs using bankruptcy multiple times and is yet to succeed.

Avon Products is a holding company that sold its US operations in 2016, according to a separate statement. The now-bankrupt entity owns the brand outside the US and its international business. It has $1.3 billion of debt mostly owed to Brazil-based Natura & Co, which acquired it in 2020, it said in court documents.

As part of the Chapter 11 filing, Avon Products’s assets will be marketed, with Natura offering to buy it for $125 million in the absence of higher offers. As part of its bid, the Brazilian company will write off $530 million of debt it’s owed and provide an additional $43 million to fund the bankruptcy, according to the filings.

The Avon brand in the US is owned currently by LG Household & Health Care Ltd. and is not part of the bankruptcy. The international operations aren’t part of the bankruptcy and are operating as usual, according to the statement.

The bankruptcy is AIO US Inc., 24-11836, US Bankruptcy Court for the District of Delaware.