Core Viewpoint - Pat McGrath Labs has entered into a debtor in possession financing arrangement to stabilize its operations amid financial difficulties, following a Chapter 11 bankruptcy filing Financing and Ownership Structure - Pat McGrath Labs has secured $10 million in debtor in possession financing from GDA Luma, which was approved by a bankruptcy court [1] - GDA Luma has committed to providing at least $20 million in post-emergence working capital [1] - Upon exiting bankruptcy, GDA Luma will hold a controlling equity interest, while founder Dame Pat McGrath will retain a significant equity stake and continue as chief creative officer [2] Bankruptcy and Financial Challenges - The company filed for Chapter 11 bankruptcy due to increasing financial pressures, including liquidity constraints, and sought short-term financing to stabilize operations [3] - Initially, Pat McGrath Labs took out a $17.5 million loan from GDA PMG Funding LLC as a temporary measure [3] - By June 2025, the company was unable to refinance or repay the GDA Loan, which had grown to over $43 million, prompting GDA to initiate an auction process [4] Brand History and Market Position - Pat McGrath Labs was launched in 2015 with the release of Gold 001, a $40 gold pigment that sold out 1,000 units in six minutes [5] - In 2018, the brand received $60 million in funding from Eurazeo Brands, which acquired a 5 to 8 percent stake at a valuation exceeding $1 billion [6] - The brand has faced operational challenges and executive turnover in recent years, leading to a significant decline in its valuation [6]

Core Insights - Pat McGrath Labs has filed for Chapter 11 bankruptcy, halting a planned auction for the company [1][3] - The company aims to continue operations while restructuring its balance sheet for long-term stability [2][3] - The brand, founded by renowned makeup artist Pat McGrath, has faced significant operational challenges and a decline in valuation [4] Company Operations - The Chapter 11 filing allows Pat McGrath Labs to operate normally while working on restoring profitability [3] - The company remains committed to its community and stakeholders, continuing to deliver high-quality products [2] Financial Background - Pat McGrath Labs was launched in 2015 and initially gained significant traction with its first product, Gold 001, which sold out quickly [4] - The company raised $60 million from Eurazeo Brands in 2018, with a valuation reportedly exceeding $1 billion, but has since seen a decline in worth [4] - Sales reportedly totaled about $50 million last year, indicating a sharp decline from previous valuations [4]