Avon Products: Chapter 11 Sale of International Business and Talc Trust
Avon Products Aug 2024 Delaware ch. 11 sold non-U.S. Avon operations via 363 process and confirmed a liquidation trust.
AIO US, Inc. and affiliated entities — the U.S. holding companies for Avon Products — filed chapter 11 petitions in the District of Delaware on August 12, 2024. The case transferred equity interests in the non-U.S. Avon operating businesses back to the Natura group through a $125 million credit-bid sale, with a post-sale liquidation trust to reconcile residual claims including talc litigation and insurance recovery disputes. Filings described debtors with no operating revenue — the operating business sat in non-debtor foreign subsidiaries — and a capital structure that was overwhelmingly intra-group, with approximately $1.271 billion of the $1.294 billion in funded debt owed to the Natura group.
| Debtor(s) | AIO US, Inc., et al. (including Avon Products, Inc. and affiliates) |
| Court | U.S. Bankruptcy Court, District of Delaware |
| Case Number | 24-11836 |
| Judge | Hon. Craig T. Goldblatt |
| Petition Date | August 12, 2024 |
| Prepetition Funded Debt (filings) | ~$1.294 billion total funded debt (mostly Natura-group obligations, as described) |
| DIP Facility (filings) | Up to $43 million parent DIP (Term SOFR + 5.50%; 150-day outside maturity trigger and other triggers, as described) |
| Sale Consideration (headline) | $125 million credit-bid amount plus assumed liabilities and settlement-driven estate funding (as described in court filings) |
| Sale Order Entered | December 6, 2024 |
| Plan Confirmed | September 24, 2025 |
| Plan Effective Date | October 7, 2025 |
| Claims Agent | Epiq Corporate Restructuring, LLC; Stretto, Inc. (replacement effective October 8, 2025, as described) |
Filing Perimeter and Debtor Structure
Debtor perimeter. The First Day Declaration described the debtors as U.S. holding companies and emphasized that they did not conduct the operating business that most consumers associate with “Avon.” In the debtors’ corporate structure narrative, consolidated revenue and day-to-day operating activity were generated by non-debtor foreign subsidiaries (referred to in filings as “Avon Non-U.S.”), while the U.S. debtors functioned as holding and finance entities as described in bankruptcy filings. The debtors also distinguished themselves from “The Avon Company” (Avon North America). Filings described the North American business as having been spun off in 2016 and as being owned by LG Household & Health Care Ltd., meaning the chapter 11 debtors were not the entity that sells Avon-branded products in North America today as described in bankruptcy filings. Industry reporting similarly emphasized that Natura’s international Avon operations would continue unaffected by the U.S. holding-company bankruptcy, while the filing was connected to talc litigation liability at the holding-company level.
| Debtor operating posture (filings) | U.S. debtors described as holding companies with no operating revenue; operating revenue generated by non-debtor foreign subsidiaries (“Avon Non-U.S.”) as described in bankruptcy filings |
| Non-debtor operating business | International Avon operating businesses described as continuing outside the debtor perimeter |
| Not the same as Avon North America | Filings described “The Avon Company” as a separate entity owned by LG Household & Health Care Ltd. as described in bankruptcy filings |
| Table: Filing Perimeter (Selected) |
Distress Drivers and Capital Structure
Talc litigation and filing drivers. The filing cited 386 individual talc cases and approximately $225 million in defense and settlement costs, and described the company as having roughly ~$1.3 billion of debt largely owed to Natura &Co. The same reporting described Natura offering a $125 million bid for assets and agreeing to provide a $43 million DIP to fund the chapter 11 process.
In filings, the debtors described the talc liabilities as a key pressure point and framed insurance recovery as limited and contested. The first day declaration described a typical talc case as resulting in only partial insurance recovery (described as 0%–15% of talc-related liabilities and costs), and referenced recent negative verdicts that further strained liquidity as described in bankruptcy filings. Reporting summarized the underlying tort allegations in more public-facing terms—claimants alleging that talc-containing cosmetic products were contaminated with asbestos and caused mesothelioma and other diseases—while still emphasizing that the filing entity was a U.S. holding company for overseas operations.
Capital structure at filing. The First Day Declaration described total prepetition funded debt of approximately $1.294 billion (principal plus accrued interest), with approximately $1.271 billion owed to the Natura group (secured and unsecured) and approximately $22.7 million in third-party unsecured bonds as described in bankruptcy filings. | | | |:--|:--| | Total prepetition funded debt (filings) | ~$1.294 billion as described in bankruptcy filings | | Natura-group debt (filings) | ~$1.271 billion (secured and unsecured, as described) | | Third-party unsecured bonds (filings) | ~$22.7 million as described in bankruptcy filings | | Debt composition (filings, selected) | Secured API borrower debt (~$273.2 million), secured guaranty debt (~$530.7 million), and unsecured promissory note debt (~$467.6 million, as described) | Table: Petition-Date Funded Debt (Selected; As Described in Filings)
DIP Financing and Liquidity Controls
DIP financing. The debtors sought a $43 million DIP facility provided by Natura and its affiliates as described in bankruptcy filings. The DIP Motion described an initial $12 million draw and a pricing structure of Term SOFR plus 5.50%, with a 2.00% default-rate add-on as described in bankruptcy filings. It also described a 1.00% upfront premium payable in kind and stated there were no unused commitment fees, exit fees, or agent fees as described in bankruptcy filings. The maturity structure described in the DIP motion was consistent with a short-duration bridge: maturity was described as the earliest of several triggers, including 150 days after the closing date and a plan effective date or a sale consummation trigger as described in bankruptcy filings.
The Final DIP Order granted lien and superpriority protections and described budget compliance and adequate protection provisions as described in bankruptcy filings.
| Facility size / initial draw (filings) | Up to $43 million; $12 million initial draw as described in bankruptcy filings |
| Pricing (filings) | Term SOFR + 5.50%; default +2.00% as described in bankruptcy filings |
| Upfront premium (filings) | 1.00% of commitments, payable in kind as described in bankruptcy filings |
| Fees not included (filings) | No unused commitment fee, exit fee, or agent fee as described in bankruptcy filings |
| Maturity (filings, selected) | Earliest of 150 days post-closing and other triggers including plan effective date and sale consummation as described in bankruptcy filings |
| Table: Parent DIP Terms (Selected; As Described) |
Sale Process and Settlement Economics
Settlement and sale process. On the petition date, the debtors filed a Sale Motion seeking to sell substantially all assets and a Settlement Motion seeking approval of a settlement agreement with Natura as described in bankruptcy filings.
The settlement motion described a bundle of economics that went beyond the $125 million “purchase price” headline. It described Natura providing DIP financing; making a stalking horse bid with a $125 million credit bid; contributing $30 million of cash described as unencumbered by Natura’s liens to fund administrative and wind-down costs and support creditor distributions; assuming specified liabilities; leaving behind certain assets including additional cash and an insurance receivable described as ~$4.2 million; and waiving approximately $530 million in secured debt principal and other intercompany recovery rights as described in bankruptcy filings. The debtors described these concessions as necessary to support administrative solvency and enable recoveries for general unsecured creditors, including talc claimants, as described in bankruptcy filings.
| Credit-bid sale baseline (filings) | Stalking horse bid with a $125 million credit bid as described in bankruptcy filings |
| Cash support (filings) | $30 million cash contribution described as unencumbered by Natura liens, intended for administrative/wind-down and distributions as described in bankruptcy filings |
| Assumed liabilities (filings, selected) | Assumption of API defined benefit pension plan liabilities described as underfunded by ~$5.86 million as described in bankruptcy filings |
| Assets left behind (filings, selected) | Additional $1 million cash and insurance receivable described as ~$4.2 million as described in bankruptcy filings |
| Debt waivers (filings, selected) | Waiver of ~$530 million secured debt principal and additional intercompany-related waivers/commitments as described in bankruptcy filings |
| Table: Settlement Economics in a Parent Credit-Bid Context (Selected; As Described) |
The Settlement Order approved the settlement agreement and implemented broad mutual releases effective upon an “Effective Time,” while expressly stating that nothing in the settlement order altered insurance policy terms or affected insurer defenses as described in bankruptcy filings. Sale order. The Sale Order approved the sale as the highest and best offer, described the consideration as the credit bid amount plus assumption of assumed liabilities, and included free-and-clear findings and robust successor liability protections as described in bankruptcy filings. The order found there was no cause to limit the credit bid under section 363(k) and included findings supporting good-faith purchaser protection under section 363(m) as described in bankruptcy filings. It also described how assumption and assignment of executory contracts and unexpired leases would be implemented, including cure and adequate assurance findings tied to the transferred contracts schedule as described in bankruptcy filings.
The sale order stated that the buyer and its affiliates would not be a successor to the sellers or the estates and would not assume or be responsible for excluded liabilities, other than assumed liabilities and permitted liens as defined in the transaction documents as described in bankruptcy filings.
| Credit bid treatment | Credit bid amount plus assumed liabilities treated as valid offer; no cause found to limit credit bid as described in bankruptcy filings |
| Free-and-clear finding | Sale approved free and clear under section 363(f) subject to assumed liabilities / permitted liens as described in bankruptcy filings |
| Successor liability | Buyer not a successor and not liable for excluded liabilities under successor/de facto merger theories as described in bankruptcy filings |
| Good faith / 363(m) | Good-faith purchaser findings and 363(m)-style protections as described in bankruptcy filings |
| Table: Sale Order Findings (Selected) |
Liquidation Trust Plan and Insurance Overhang
Plan confirmation and liquidation trust. After the sale, the case proceeded to confirmation of a liquidating plan centered on the Avon Liquidation Trust (ALT) as described in bankruptcy filings. The Confirmed Plan created multiple claim classes, including a dedicated class for talc claims (Class 4) and separate treatment for general unsecured claims (Class 3) as described in bankruptcy filings. General unsecured claims were bifurcated into electing and non-electing claims, with different funds and distribution mechanics as described in bankruptcy filings.
The confirmed plan described several distinct reserves/funds administered by the liquidation trust, including a Priority Reserve (for administrative/priority obligations), a GUC Recovery Fund (for certain non-electing general unsecured claim distributions), a Special Electing GUC Recovery Fund (for electing general unsecured claims), and a TC Recovery Fund (for talc claim distributions) as described in bankruptcy filings. It also described an “Available Cash Allocation Percentage(s)” formula that allocates available cash between electing general unsecured claims and talc claims based on their aggregate allowed amounts as described in bankruptcy filings.
| Priority Reserve | Reserve described for administrative (excluding professional fees), secured, and priority claims as described in bankruptcy filings |
| GUC Recovery Fund | Fund described for non-electing general unsecured claim distributions as described in bankruptcy filings |
| Special Electing GUC Recovery Fund | Fund described for electing general unsecured claim distributions as described in bankruptcy filings |
| TC Recovery Fund | Fund described for allowed talc claim distributions as described in bankruptcy filings |
| Allocation formula | Cash allocation between electing GUCs and talc claims based on aggregate allowed amounts as described in bankruptcy filings |
| Table: Liquidation Trust “Funds” and Allocation Mechanics (Selected; As Described) |
Talc trust distribution procedures. The Confirmation Order approved trust distribution procedures for talc claims and stated that the allowed amount of a talc claim is determined under those procedures as described in bankruptcy filings. The order stated that installment payments, initial payments, or payments based on payment percentages established under the trust distribution procedures are not equivalent to a claimant’s full allowed amount as described in bankruptcy filings. Insurers sought modifications to the confirmation schedule to obtain expert discovery tied to their objections concerning the trust distribution procedures and insurer exposure as described in bankruptcy filings.
Liquidation trustee and governance. The confirmation order appointed Hon. Melanie L. Cyganowski (Ret.) as the initial liquidation trustee effective as of the effective date and authorized formation of an ALT Trust Advisory Committee with consent and consultation rights for specified trustee actions as described in bankruptcy filings. The confirmed plan described the liquidation trustee’s role as administering the winding down, pursuing retained causes of action, administering claims and distributions from the designated reserves/funds, and implementing case closure tasks as described in bankruptcy filings. Insurance rights transfer and injunction. The confirmation order approved transfer of “Insurance Rights” to the liquidation trust notwithstanding anti-assignment provisions and described an insurance entity injunction as essential to the plan, while also stating that the transferred insurance rights remain subject to policy terms and coverage defenses as described in bankruptcy filings. The later docket reflects that insurance disputes remained active after confirmation. Insurers sought more time for expert discovery tied to talc claim valuation and trust procedures before confirmation as described in bankruptcy filings. After the plan went effective, certain insurers sought to stay the confirmation order pending appeal and to enjoin a state court action filed by the trust, while the trust and advisory committee opposed the requested relief and argued (among other things) mootness and jurisdictional limits post-effective date as described in bankruptcy filings (trust objection).
| Insurance rights transfer | Transfer of insurance rights to the liquidation trust approved notwithstanding anti-assignment provisions; rights remain subject to policy terms and coverage defenses as described in bankruptcy filings |
| Insurance entity injunction | Injunction described as essential and set out in conspicuous plan/DS language as described in bankruptcy filings |
| Insurer discovery/schedule dispute | Insurers sought more time for expert discovery tied to TDP and insurer exposure concerns as described in bankruptcy filings |
| Post-effective stay dispute | Insurers sought stay pending appeal; trust/advisory committee opposed and described jurisdiction/mootness arguments as described in bankruptcy filings (trust objection) |
| Table: Insurance Issues as Confirmation Friction (Selected) |
Post-effective deadlines and claims agent transition. The effective date notice stated that the plan effective date was October 7, 2025 and set a December 8, 2025 administrative expense claims bar date for most administrative expense claims (excluding professional fee claims and statutory fees), along with a rejection damages bar date keyed to 30 days after the later of the effective date or the effective date of a rejection as described in bankruptcy filings. Shortly after effectiveness, the court entered an order terminating Epiq’s retention as claims and noticing agent and authorizing Stretto, Inc. as replacement claims and noticing agent effective October 8, 2025, with detailed claims register, creditor matrix, and data transfer requirements as described in bankruptcy filings. ## Key Timeline
| 2024-08-12 | Chapter 11 petitions filed as described in bankruptcy filings |
| 2024-08-14 | Interim DIP Order entered; Epiq appointed as claims and noticing agent as described in bankruptcy filings |
| 2024-10-29 | Final DIP Order entered; Bidding Procedures Order entered as described in bankruptcy filings |
| 2024-12-06 | Settlement Order and Sale Order entered as described in bankruptcy filings |
| 2025-09-24 | Confirmation Order entered as described in bankruptcy filings |
| 2025-10-07 | Plan effective date as described in bankruptcy filings |
| 2025-10-08 | Claims agent transition effective date (Epiq to Stretto, as described) |
| 2025-12-08 | Administrative expense claims bar date as described in bankruptcy filings |
| Table: Key Timeline and Post-Effective Deadlines (Selected) |
Corporate history. Avon was founded in 1886 as a direct-selling beauty company. Natura &Co acquired Avon in 2019 in an all-stock deal, integrating it into a multi-brand portfolio. Natura's 2023 annual reporting described the U.S. bankruptcy as a mechanism to resolve legacy debts and liabilities while maintaining ongoing non-U.S. operations.
Frequently Asked Questions
When did Avon Products (AIO US) file for chapter 11 bankruptcy?
Avon Products’ U.S. holding-company debtors filed chapter 11 petitions in the District of Delaware on August 12, 2024, using the filing vehicle “AIO US, Inc., et al.”
Why did Avon Products file chapter 11 in this case?
The case was framed as a response to legacy talc litigation exposure and costs and the resulting liquidity pressure at the U.S. holding-company level, with insurance disputes described as a central constraint. The chapter 11 strategy paired a parent-funded DIP with a settlement and sale process designed to fund administration and enable a liquidation trust framework for remaining claims as described in bankruptcy filings.
How many talc lawsuits were pending at the time of the bankruptcy filing?
The filing cited 386 individual talc cases and approximately $225 million in defense and settlement costs. Filings described legacy talc liabilities as a key driver of the chapter 11 process as described in bankruptcy filings.
What was the DIP financing in the Avon chapter 11 case?
The debtors sought a parent-provided DIP facility of up to $43 million, with an initial $12 million draw, pricing of Term SOFR + 5.50%, and an outside maturity trigger described as 150 days after the closing date (subject to other triggers) as described in bankruptcy filings.
What did Natura buy in the 363 sale, and what was the headline purchase price?
The sale process was designed to transfer substantially all assets associated with the non-U.S. Avon operating business to the Natura group through a court-approved sale, with a stalking horse structure and a credit-bid headline amount described as $125 million.
What happened after the sale closed?
After entry of the sale order and related settlement order in December 2024, the case proceeded to confirmation and effectiveness of a liquidating plan that created the Avon Liquidation Trust to administer remaining assets and claims as described in bankruptcy filings.
What is the Avon Liquidation Trust and what does it do?
The confirmed plan created the Avon Liquidation Trust to hold and administer designated trust assets and to manage the wind-down, including reconciling and paying claims and pursuing retained causes of action, with multiple distribution funds/reserves described for different claim populations as described in bankruptcy filings.
Who is the claims agent for Avon Products?
Epiq Corporate Restructuring, LLC served as the claims and noticing agent during the chapter 11 cases and maintained the claims register and noticing functions as described in bankruptcy filings. After the plan became effective, the court authorized Stretto, Inc. as replacement claims and noticing agent effective October 8, 2025 as described in bankruptcy filings.
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