BH Cosmetics, which recently created makeup lines with Doja Cat and Iggy Azalea, has filed for bankruptcy. 

The cosmetics brand filed for Chapter 11 bankruptcy protection in Wilmington, Del., on Jan. 14, with plans to sell its mental property for $4.3 million. 

BH sold its products online, in addition to through Ulta Beauty and other retailers.

BH said in court papers that it hired Hilco Streambank and has signed a purchase order agreement with RBI Acquisition Holdings LLC because the stalking-horse bidder for the assets. A pre-petition sale attempt, where the corporate hired a banker to sell itself starting in September, didn’t work out, the corporate wrote in court papers. 

“The debtors’ declining revenues are insufficient to support continued operations,” BH wrote in court documents. BH is majority owned by MidOcean Partners, which initially invested in 2018. At the moment, industry sources told WWD that BH had between $50 million and $60 million in net sales, and was very profitable.

But in court papers, BH said it faced “increased competition” in the sweetness category, and that attempts to keep up market share eroded profitability. “The debtors have also struggled to acquire profitability after pursuing an ultimately unsuccessful launch of assorted product lines,” BH’s chief restructuring officer, Spencer Ware from Riveron Management, wrote in a declaration.

In 2019, the corporate brought in a latest management team that suggested using 2020 as a transition yr. However the COVID-19 pandemic had major consequences for BH, which sells eye shadow palettes and makeup brushes, and sales dropped from $55.8 million in 2019 to $33.6 million in 2020.

BH delayed the launch of a planned skincare line, called Itsa, with a purpose to give attention to celebrity collaborations with Doja Cat and Iggy Azalea, the corporate said in court papers. However the launch of those lines “fell below expectations,” Ware said in court papers, and BH hired Riveron as a turnaround adviser.

Many makeup brands struggled throughout the COVID-19 pandemic as consumers stayed home, wore masks and wore less makeup. At the identical time, celebrities and influencers have churned out their very own brands and product firms — a method that veered away from collaboration-style beauty deals that were popular in 2016 and 2017 — though those celebrity brands have seen various levels of success.

BH owes $9.6 million on a term loan, and $13.9 million on a revolving loan, the corporate said in court papers. The corporate also has large creditors based in China, including Dongguan Fay Cosmetic Brushes Co., Beauty Beyond Industry Ltd. and Shenzhen Colorl Cosmetic Products Co., that are each owed greater than $1 million.

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