The Avon company surprised the world when it declared bankruptcy on Monday, August 12, after facing a wave of lawsuits alleging that the talc in its products causes cancer. This news has caused a stir among consumers, who are wondering if Avon’s bankruptcy will affect customers in Mexico.
Avon Products Inc. on Monday filed for Chapter 11 bankruptcy protection, a section that broadly allows bankrupt companies to restructure and continue operations while paying off debt to creditors.
This comes after the company has raised $225 million in payments to defend itself against 386 personal injury lawsuits over the possibility that talc in its products is carcinogenic, and no longer has “sufficient liquidity to litigate and/or resolve the cases,” according to its restructuring director, Philip Gund. Worse, the company expects the number of lawsuits against it to continue to rise.
What will happen to Avon’s operations in Mexico?
However, Natura, which is responsible for distributing Avon products in Mexico, does not foresee an impact in the region.
“Natura & Co, as the largest creditor of Avon Products Inc (API), supports this reorganization and considers API’s decision to be an important step in the simplification process of Natura & Co, which began a couple of years ago. According to the statement, this process is not expected to have an impact on operations outside the United States, including those in Latin America, where the integration of the Avon and Natura brands continues to advance steadily,” said Fábio Barbosa, CEO of Natura &Co.
Fabio Barbosa, CEO of Natura, explained that Avon’s bankruptcy filing is not expected to impact operations outside the US, including those in Latin America, where “the integration of the Avon and Natura brands continues to move forward firmly.”
How did the Avon brand become famous?
The Avon brand became famous in the 20th century for its door-to-door saleswomen with their slogan “Avon Calls.” Today, the international brand said it was forced to file for bankruptcy, in part due to the pandemic and to face a wave of lawsuits alleging that talc in its products caused cancer.
The company has $1.3 billion in debt, mostly to its parent company, Natura, which bought Avon Products in 2020.
Avon Products is the latest company to file for bankruptcy to deal with lawsuits arising from the sale of talcum powder products. In particular, Johnson & Johnson has attempted to settle with the plaintiffs by filing for bankruptcy several times and has yet to be successful.
