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A Revlon billboard in Times Square in Manhattan.Carlo Allegri/Reuters

Revlon Inc. REV-N has filed for bankruptcy after the U.S. cosmetics firm buckled under debts it built up in a bid to compete with online-focused upstarts.

Known for its nail polishes and lipsticks, the 90-year-old company listed assets and liabilities of between US$1-billion and US$10-billion in a court filing on Wednesday.

Revlon, which was formed in 1932 by brothers Charles and Joseph Revson and Charles Lachman, has in recent years lost shelf space and sales to startups backed by celebrities such as Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Beauty.

“The brands in its portfolio are themselves a little older and do not offer the hype that the contemporary customer is looking for,” said Thomai Serdari, a professor of marketing at New York University.

The company has also been hit by supply issues, made worse by the COVID-19 pandemic. Resulting product shortages were another major factor in tipping it into bankruptcy and analysts have said they were unlikely to be resolved in the near-term.

Competitor and CoverGirl owner Coty Inc., by contrast, has gained market share by investing heavily to improve supplies.

“Our challenging capital structure has limited our ability to navigate macroeconomic issues,” said Debra Perelman, Revlon chief executive since mid-2018 and daughter of Ron Perelman, who owns its controlling shareholder MacAndrews & Forbes.

Shares in Revlon fell as much as 44 per cent on Thursday on the bankruptcy filing before reversing course to trade 10 per cent higher.

Its shares had halved in market value between last Thursday and close of trading on Wednesday. Media reports of a potential bankruptcy filing emerged on Friday.

Mittleman Brothers Investment Management, which holds about 3 per cent of the company’s stock, expressed hope equity holders would manage a decent payout despite the bankruptcy.

That could happen if Revlon enjoys rising sales that allow it to overcome supply chain issues it has struggled with, Chris Mittleman said in an e-mail to Reuters.

Revlon, which started off selling nail enamel, was sold to MacAndrews & Forbes in 1985 and went public 11 years later.

Revlon bought Elizabeth Arden in a US$870-million skin care bet in 2016 to fend off competition. It houses brands including fragrances by Britney Spears and Christina Aguilera.

But the company’s sales lagged over the years and in 2021 fell 22 per cent from its 2017 levels. It also made headlines two years ago when Citigroup Inc. accidentally sent nearly US$900-million of its own money to Revlon’s lenders.

Revlon, which had long-term debt of US$3.31-billion as of March 31, said on Thursday it expected to get US$575-million in debtor-in-possession financing from its existing lender base upon receipt of court approval.

The company said none of its international units, except Canada and the United Kingdom, are part of the Chapter 11 bankruptcy proceedings.

Revlon asked its bankruptcy judge to confirm that the Chapter 11 filing would not stop Citibank’s ongoing appeal over US$504-million in funds it is still trying to get back after its mistaken payment to Revlon’s lenders.

Citigroup has asked the United States Court of Appeals for the Second Circuit to force the lenders to return the money. Revlon said in court papers that a prompt resolution of the dispute would help its bankruptcy case move forward.

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