Makeup company Pat McGrath Labs, known for creating Taylor Swift’s iconic red lipstick, has filed for Chapter 11 bankruptcy.
Filing in the Southern District of Florida, the company listed over $50 million in liabilities, USA Today reports.
In a court filing Jan. 25, lawyers for McGrath indicated that the founder wanted to “continue to operate its business in the ordinary course, to preserve the value of its estate, to preserve jobs, and to facilitate its orderly reorganization,” according to USA Today.
In an emergency filing, the company requested approval for a debtor to dole out a $1 million loan to keep the business afloat and pay employees.
A case filed under chapter 11 of the United States Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership, according to the U.S. Courts website.
A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time, the site says.
USA Today reports that the company recently announced a plan to auction off the brand’s assets.
“Valued as a billionaire in 2018, McGrath’s dominance in the beauty sphere is likely to be unchanged by the filing,” the outlet writes.
“The move may, however, reflect a larger trend in the retail makeup industry as consumers turn toward celebrity-backed brands.”
