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The world of cosmetics is famously competitive, with countless brands entering and exiting the scene over the years. But when a well-recognized, billion-dollar beauty brand files for bankruptcy mere months after headlining the Victoria’s Secret Fashion Show and launching a new product line with Louis Vuitton, that’s going to raise more than a few sculpted eyebrows. Just how did Pat McGrath Labs — whose founder Dame Patricia McGrath was awarded the Dame honorific by Queen Elizabeth II and named Glamour’s 2025 Woman of the year — end up filing for Chapter 11 bankruptcy protection in Florida in January 2026?
The news came right on the heels of the announcement that Pat McGrath Labs’ assets would be put up for auction on January 27, 2026, which itself was surprising, given the brand’s apparent global success. These liquidation plans were abruptly cancelled when the company filed for bankruptcy instead, though it’s not the brand’s finale just yet. Multiple companies have managed to come roaring back from bankruptcy, and a recent press release from GDA Luma (via GlobeNewswire) revealed Pat McGrath Labs had secured $30 million in court-approved funding from the U.S.-based firm. Nevertheless, the company’s uncertain future may not actually be all that shocking. A deeper look at the fashion house partnerships, industry awards, and popularity among big-name celebrities like Taylor Swift reveals that, by 2025, Pat McGrath Labs had become a financial supernova waiting to implode.
Being valued at $1 billion may have contributed to Pat McGrath Labs’ troubles
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In 2018, Pat McGrath Labs made headlines by achieving a $1 billion valuation, thanks to a sizeable investment from Eurazeo Brands. For comparison, reality star Kylie Jenner’s then-popular cosmetic line peaked the same year at $900 million, with Elle going on to report waning sales and bankruptcy rumors in 2024. This was attributed to Jenner’s brand being overvalued as well as consumer preferences moving to more minimalist, cleaner beauty trends — two factors that could also explain McGrath’s recent struggles.
Pat McGrath Labs’ valuation may indeed have been overly optimistic. When Eurazeo came on board in 2018, Women’s Wear Daily reported an expected $60 million in sales for the year; that was $20 million higher than the actual reported sales at the time (according to Shoppe Black). Eurazeo withdrew its funding in 2021, while fellow investor Sienna Investment Managers lowered its stake by 88%, suggesting a significantly lower valuation than $1 billion. According to The Express Tribune, the company’s estimated liabilities ranged between $50 million and $100 million when it filed for bankruptcy.
A press release sent out on January 27, 2026 (via PR Newswire) blames an increasingly challenging market and “oppressive obligations” to investors and lenders. McGrath herself also stated in the release that the bankruptcy filing would allow her to “remain in the driver’s seat… For several months, I have acted at the behest of my lenders but now it’s time to reset, start fresh, and get back on mission of bringing the highest quality makeup to the marketplace.”
Overexpansion may have also harmed the Pat McGrath Labs brand
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The Pat McGrath Labs filing may not be as scandalous as some company bankruptcies throughout history. But it’s still intriguing. Beyond overvaluation and shifting customer preferences, the reason Pat McGrath Labs was unable to meet investor expectations may simply be because it grew too much, too fast. Launched in 2015, the company became the top-selling beauty line at Selfridges (a higher-end UK department store chain) by 2019. Throughout the next few years, the brand conducted numerous high-level collaborations, such as launching a lipstick product with streetwear brand Supreme and doing runway looks for fashion designer Marc Jacobs — all while expanding the number of retailers carrying its products despite starting as its own digital-first brand. It was also revealed in 2025 that McGrath herself had been working with Louis Vuitton for years to develop a new separate product line.
At the same time, some customers have criticized McGrath products as costly and overrated on social media. In one Reddit conversation in early 2025, a customer said, “The brand used to be special… releases were essentially guaranteed to be high quality because of their reputation. Over the years, they have lost a lot of this.”
It’s possible that the bankruptcy filing may work in the company’s favor and help Pat McGrath Labs regain its footing. Still, with the future for the former makeup juggernaut so unclear, the brand’s fans may want to stock up soon.
