Investors in Revlon have accused the battling magnificence organization of “pillaging” intellectual residence it had pledged as collateral for a $1.eight billion personal loan as section of a “brazen” scheme to increase new money.
In a lawsuit submitted Wednesday, UMB Financial institution, the administrative agent for the creditors, said the collateral, which features emblems and other rights associated with “many of the greatest known, well-established magnificence makes in the earth,” has been “ripped away and pledged to other creditors.”
Revlon secured the $1.eight billion personal loan in 2016 to aid finance its acquisition of the legendary Elizabeth Arden brand name. Due to the fact that offer, its enterprise has been hit by the change to on line searching and, lately, the coronavirus pandemic, which remaining it facing a economical storm previously this calendar year.
“This case is a stark instance of a borrower that has ignored frequently its legal obligations to its creditors,” the suit says. “Covid-19 is no license to breach contractual commitments to creditors, to have interaction in transparent vote rigging, and to steal and reuse collateral for alternative functions.”
In accordance to The Wall Street Journal, UMB signifies creditors including Brigade Funds Management, HPS Investment Companions, and Symphony Asset Management that “have spent months resisting Revlon’s restructuring techniques.”
In a statement, Revlon said the group had “repeatedly resorted to baseless accusations in an try to enrich on their own and hurt the organization by blocking Revlon from exercising its contractual rights to protected the funding necessary to execute our turnaround strategy and navigate the Covid-19 disaster.”
The suit alleges Revlon to begin with siphoned off section of the collateral for the 2016 personal loan to protected a $two hundred million personal loan in 2019 from Ares Management, offering the new loan company “its very own, distinctive safety fascination in the incredibly exact same residence.”
The organization then allegedly negotiated a “bigger, bolder transaction” in May 2020 that elevated an additional $880 million and was “devastating” for the 2016 creditors.
To complete the offer, the suit says, Revlon devised an finish-run all over the consent threshold by arranging a “sham” revolver personal loan with helpful buyers who furnished the majority required to approve the new funding.
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