Pat McGrath Labs Files for Chapter 11 Bankruptcy Protection

In January 2026, the luxury beauty powerhouse Pat McGrath Labs filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Florida. This strategic move was made to halt a planned public auction of the brand’s assets that had been scheduled for January 27. By choosing Chapter 11, the company aims to restructure its significant debt while maintaining full control over its operations, rather than facing a forced liquidation or immediate sell-off.

The primary driver behind the filing is a heavy debt load estimated between $50 million and $100 million. Despite once achieving a "unicorn" valuation of over $1 billion in 2018, the brand has struggled with liquidity constraints in a tightening global beauty market. While Pat McGrath herself remains a dominant creative force recently taking on a high-profile role as the creative head of Louis Vuitton La Beauté her namesake brand faced declining sales, which reportedly dipped to approximately $50 million in 2024. This financial pressure was exacerbated by supply chain disruptions and "oppressive" obligations to lenders and former investors.

Operationally, the brand has faced several years of internal turbulence, including executive shifts, layoffs, and a cooling of the hyper-growth it saw during its initial rise. Earlier efforts to stabilize the business involved a potential asset sale managed by Hilco Global, but the bankruptcy filing effectively terminated that process to allow for a court-supervised reorganization. To keep the business running during this transition, the company filed emergency motions to secure loans to cover nearly $700,000 in employee wages and payments to critical vendors, ensuring that products remain available at major retailers like Sephora and Ulta.

Ultimately, this filing represents a "reset" for one of the most influential names in the beauty industry. Dame Pat McGrath has expressed that the restructuring will allow her to "remain in the driver's seat" and realign the company’s financial framework with its creative vision. While the brand’s future may involve fresh investment or a strategic sale, the immediate goal of the Chapter 11 process is to simplify its capital structure and preserve the legacy of a brand that remains a cult favorite among makeup enthusiasts worldwide.