Pat McGrath Labs filed for Chapter 11 chapter safety on Jan. 22, after a last-ditch try to safe new funding or an operational companion fell via.
The firm will proceed to promote its celestial Mothership palettes, MatteTrance lipsticks and different merchandise because it restructures, a spokesperson informed The Business of Beauty. And Pat McGrath herself has pledged $1 million to pay vital distributors and compensate workers on the model she based greater than a decade in the past, and the place she remains to be founder and chief government.
But although Pat McGrath Labs will proceed to function roughly as-is within the near-term, what its long-term future appears to be like like is an open query. The submitting is a crash touchdown for a model that has seen its shine fade significantly since its 2015 launch with the Gold 001 metallic eyeshadow equipment, and a 2018 funding spherical that valued the corporate at $1 billion. After a succession of investor exits, that valuation sat nearer to $174 million, because the model suffered from important debt, repeated layoffs and allegations of mismanagement.
In an affidavit filed on Monday, McGrath wrote that the model’s “financial issues stem from an unsustainable capital structure, accumulated legacy liabilities, and liquidity constraints that have impaired [the brand’s] ability to operate efficiently and strategically.” It specifies that its major debt comes from a mortgage secured in April 2025 from GDA PMG Funding, an entity affiliated with the Miami-based investor Gabriel de Alba. Pat McGrath Labs alleged it acquired $17.5 million, whereas GDA contends that it’s owed greater than $43 million.
Pat McGrath Labs was unable to repay or refinance the mortgage, and in June opened a checking account managed by GDA, considerably lowering its entry to working money. In October, GDA served a default discover, and in December retained US monetary agency Hilco Global to promote the model’s property.
An public sale was scheduled for Jan. 27, and Hilco had contacted potential consumers specialising in distressed property, in response to three sources. Two individuals who regarded on the enterprise in the course of the Hilco course of informed The Business of Beauty that the corporate pulled in about $50 million in gross sales final yr. In its submitting, the model estimated property and liabilities of $100 million – $200 million, and between 200 and 999 estimated collectors.
“This was a restart, essentially,” stated one supply who had regarded on the enterprise. “Everything is a deep hole to fill.”
The Pat Factor
The query which will decide Pat McGrath Labs’ destiny is how McGrath herself matches into the enterprise as soon as it emerges from chapter.
Since founding Pat McGrath Labs in 2015, McGrath has been inextricable from her namesake model, which was initially supposed as a automobile to convey her editorial-level make-up artistry to the wonder market.
“I founded the brand because I wanted to take what I was doing backstage and bring it to people directly,” wrote McGrath within the affidavit.
This technique initially resulted in small-batch product drops tied to particular runway moments, just like the Lust 002 lip equipment, with a vinylic end that sprang from the faces of fashions at Versace. A key inflection level occurred when the model secured a $60 million funding from French PE agency Eurazeo at a $1 billion valuation and launched into Sephora. Suddenly, McGrath’s pet challenge grew to become a worldwide magnificence enterprise. As the corporate grew and have become extra complicated, it grew to become troublesome to shortly capitalise on her runway work.
The saga of Pat McGrath Labs blends just a few cautionary tales — of courting personal fairness, of unicorn valuations, of creative-commercial stress — right into a lightning rod for magnificence business dialogue.
“The news around Pat McGrath Labs isn’t about makeup,” wrote skincare label Rodial founder Maria Hatzistefanis on Linkedin final week. “It’s about what happens when creative dominance and commercial reality drift apart.”
The two individuals who participated within the Hilco course of stated they assumed McGrath would proceed to steward the corporate, offering her inventive enter and making certain the model stays founder-led. “You’d want to partner directly and tightly with her,” one of many individuals stated.
“She is the equity of the brand,” stated Rishum Butt, a magnificence business marketing consultant. “She’s what lends it cultural weight and capital.”
Asked if McGrath would proceed within the CEO function in the course of the chapter proceedings, a spokesperson replied: “Business as usual.”
It stays to be seen whether or not the corporate can discover an acquirer whose imaginative and prescient for the model syncs up with McGrath’s. One risk floated by the contributors within the Hilco sale course of was to desert its premium positioning and function as a mass label, just like a Max Factor. Once a mainstay in Sephora shops worldwide, Pat McGrath Labs has already winnowed its door depend, with followers noting an inflow of discounted merchandise at off-price retailers like TJ Maxx.
The artist already has an off–ramp in her creative director function for Louis Vuitton’s new cosmetics line, and continues to work on vogue exhibits and editorial tasks as she has for a long time, with outstanding consistency.
But it’s even tougher to think about a Pat McGrath Labs with out Pat McGrath. The present make-up panorama is dominated by artist-forward manufacturers, from Makeup by Mario to Danessa Myricks to Westman Atelier.
Her stock remains to be coveted by a cohort of make-up obsessives, who await its common Mothership palette drops with the fervent endurance of sneakerheads and who voiced their shock on social media within the hours after the chapter was reported.
“Nooo pat!!!!! Please don’t stop,” learn one reply to the information on X. On Instagram, customers stated they have been “heartbroken” and “devastated” whereas praising the model’s formulation and packaging.
They’re not in thrall to the glittering Italian-made pigments, however to their creator, who nonetheless toils, season after season, behind the scenes to set the usual for magnificence artistry. And one truth stays certain: McGrath will not be finished working.
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