Pat McGrath Labs files for Chapter 11 bankruptcy - but what does that mean?

Pat McGrath Labs, one of the most sought-after beauty brands and an extension of one of the most influential makeup artists on the planet, is filing for Chapter 11 bankruptcy protection.

The petition was filed in the Southern District of Florida on 22 January, and comes weeks after it was reported that the brand would be sold, with an auction of its assets scheduled by the brand’s secured lender now cancelled.

Throughout her career, McGrath has been awarded the Council of Fashion Designers of America Founder’s Award - the first Makeup Artist in history selected for their highest honour, The British Fashion Council 2017 Award for Fashion Creator and Time Magazine’s 2019 100 Most Influential People, as a “Titan” of the fashion industry.

She's done countless Fashion Weeks, boasted household names as her clients, including Madonna, Oprah, Jennifer Lopez, Scarlett Johansson and Jennifer Aniston, and has become known as the force behind the beauty at the Victoria's Secret Fashion Show.

She founded the brand in 2015, allowing followers of her work an opportunity to purchase the award-winning formulas behind her looks - and by 2019, it was valued at $1 billion.

So, what happened?

Well, we don't know, but whispers that something was brewing behind the scenes have been circulating for a while.

PML releases (including their iconic Mothership palettes) have been few-and-far between since the pandemic, and since then, McGrath has been involved in a number of projects external to the brand, including helping formulate the products in Louis Vuitton's debut makeup line.

The company has claimed between $50 million and $100 million in estimated liabilities, according to filings. Despite its huge valuation previously, Sienna Investment Managers marked down its investment in Pat McGrath Labs by 88 percent in 2024, implying a valuation of closer to $174 million. By 2025, it signalled its intent to exit.

However, for those who've followed the brand on a consumer level, fans are now concerned about how the future may affect them.

"Not the best news for makeup lovers", one fan wrote.

"Even iconic brands can hit rough patches. Chapter 11 is not the end, it is a chance to restructure and come back smarter. Beauty trends change fast, but strong brands can adapt if they play it right", another manifested.

"This news hits hard, but it doesn't dim her legacy one bit", a third added.

Pat McGrath Labs for Maison Margiela Pat McGrath Labs

What is Chapter 11 bankruptcy?

Chapter 11 bankruptcy allows companies to continue operating while they fix their debts, under the supervision of a court.

In simple terms, that could mean that by restructuring the company and its finances, they could ultimately emerge from the other side of this more profitable. Delta Airlines and Marvel are just two of the companies that have managed to change their fortune and avoid closing down by going down this route.

While under Chapter 11 bankruptcy, the company will have the right to three things: Automatic stay (breathing room from creditors collecting debts until the proceedings are over), the right to optionally sell assets to pay creditors, and executory contract rights - the ability to potentially get out of pre-existing contracts without penalty or fear of being sued.

Reorganisation plans must be created within 120 days and approved by a committee comprised of the creditors.

The result? Hopefully a brand that can bounce back from its pre-existing debts.

Let's hope this isn't the end of Pat McGrath Labs as we know it.

Indy100 has reached out to Pat McGrath Labs for comment

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