Why Avon Filed for Bankruptcy in the USA

Avon: The Fall of a Beauty Giant

Avon, the cosmetics giant known for its door-to-door sales model, has officially filed for bankruptcy.
The company filed for Chapter 11 bankruptcy in Wilmington, Delaware, overwhelmed by a series of legal cases regarding its talc-based products allegedly linked to cancer.

With debts exceeding 1 billion dollars, including 78 million spent on legal cases and an additional 225 million in defense costs, the US beauty holding company lacks the resources to cover legal expenses and settlements.
Avon stated that it does not have enough liquidity to resolve the 386 pending cases.

The Crisis and the Future of Avon

The crisis is also affecting Avon’s subsidiaries in Europe, the UK, and Latin America.
Founded in 1886, Avon has been a symbol of sales and innovation in the cosmetics industry for decades.
In 2020, the company was acquired by Brazilian company Natura, which recently offered a $43 million loan to support the subsidiary.

However, the surge in legal cases forced Avon to declare bankruptcy to protect what’s left of the company and initiate a restructuring process.
The unfortunate fate of the beauty giant in the US stems from allegations of using carcinogenic talc in its products.

Over the years, Avon has had to pay significant sums to compensate victims.
Starting with initial settlements in 2010, the company faced a $46 million damages and fines payment in 2022.
Just a month ago, Avon received an unprecedented $24.5 billion judgement.

Despite consistently denying the allegations and claiming innocence, the legal expenses and settlements proved to be unsustainable, leading to financial collapse.
Avon now joins a long list of companies impacted by legal disputes related to talc.

Recently, Johnson & Johnson agreed to pay $6.5 billion to settle approximately 61,000 civil cases.
This scandal continues to shake the industry, highlighting the devastating consequences of such litigations.