Avon, the cosmetics giant known for its door-to-door sales model, is officially in bankruptcy. The company filed for Chapter 11 bankruptcy in Wilmington, Delaware, crushed by an avalanche of lawsuits relating to its products based on talc, accused of containing asbestos and causing cancer. With debts exceeding 1 billion dollars, of which 78 million spent in legal cases and a further 225 million already paid out for defense, the US beauty holding company no longer has the resources to cover legal costs and compensation. The company said it does not have enough liquidity to resolve the 386 individual cases still pending.
The crisis does not even spare the holding's branches in Europe, the United Kingdom and Latin America. After filing for bankruptcy, the Brazilian parent company Natura & Co offered to buy Avon's assets for $125 million, also writing off $530 million in debt and providing another $43 million to finance the insolvency proceedings.
Avon, a storm of causes
Founded in 1886, Avon has been a symbol of sales and innovation in the world of cosmetics for decades. In 2020, the company was acquired by Brazil's Natura, which recently offered a $43 million loan to support the subsidiary. However, the increase in lawsuits forced Avon to file for bankruptcy to protect what remains of the company and start a renovation.
Over the years, Avon has been forced to pay large sums for compensate the victims. After starting the first compensation payments in 2010, in 2022 it had to pay 46 million dollars in damages and fines. Just a month ago, the company faced an unprecedented $24,5 billion judgment. Although society has always denied the charges and declared herself innocent, the legal costs and compensation proved unsustainable, leading the company to financial collapse.
Avon thus joins a long list of companies hit by talc-related litigation. Lately, Johnson & Johnson ha agreed to pay $6,5 billion to compensate the victims of approximately 61 thousand civil cases. This scandal continues to rock the industry, demonstrating how devastating the consequences of such litigation can be.
