Updated at 2:50 p.m. ET on Jan. 26
Pat McGrath Labs is filing for Chapter 11 bankruptcy, WWD has learned.
“During this process, the company will continue operations in the ordinary course of business while working to restructure its balance sheet and to forge a path to thrive,” the brand said in a statement. “Pat McGrath Labs remains committed to its community, customers, partners and stakeholders as it continues delivering its signature, high-quality products and culture-defining artistry and innovation.”
As a result, it added that the company’s secured lender’s scheduled auction for the brand’s assets has been postponed indefinitely.
In December, WWD reported that Pat McGrath Labs was being marketed for sale, with Hilco Global managing the process. The auction was meant to take place on Monday.
At the time, a spokeswoman for Pat McGrath Labs said: “Pat McGrath Labs is currently going through restructuring and recapitalization processes with its partners to align its financial framework with the enduring strength and creative leadership of the brand. These processes, expected to be completed in early 2026, along with a strong pipeline of innovation, the commitment of its partners and the unwavering support of its passionate global community, will allow Pat McGrath Labs to move forward in a productive and healthy environment. The good news is, from the beginning of this year, brand sales are up significantly and Pat McGrath Labs is feeling great momentum going into the new year.”
Chapter 11 documents filed on behalf of McGrath gave more insight, stating that despite the strength of the brand, Pat McGrath Labs faced growing financial headwinds in early 2025 including liquidity constraints. It then sought short-term financing to stabilize operations, taking out a $17.5 million loan million from GDA PMG Funding LLC as a temporary bridge while it worked toward a longer-term resolution.
However, by June 2025, it had not been able to refinance or repay the GDA Loan on the timeline originally agreed. Later, GDA asserted that the outstanding amount due under the GDA Loan is in excess of $43 million and subsequently began the auction process, according to McGrath’s affidavit.
McGrath’s affidavit states that she began Chapter 11 proceedings to halt the auction. “The debtor commenced this chapter 11 case to prevent the irreparable harm to the debtor that would have resulted from what the debtor believes would have been a commercially unreasonable Article 9 sale being conducted by GDA.”
After decades on the fashion week circuit, pioneering runway looks from studded lips to gilded eyebrows, Pat McGrath launched the makeup line in 2015 with Gold 001, a $40 gold, multipurpose pigment. The limited-edition product, sold in a bag full of custom sequins (standard packaging for many products in the line), sold out 1,000 units from her website in six minutes and kicked off a series of product drops.
In 2018, the brand received $60 million in funding from Eurazeo Brands. At the time, industry sources said the firm was estimated to have taken a 5 to 8 percent stake in the business at a valuation of more than $1 billion.
But in recent years the brand, sold at both Sephora and Ulta Beauty, among others, has struggled with operational challenges and undergone executive changes and layoffs while its valuation is now said to be a fraction of what it once was. A few years ago, Eurazeo quietly sold its stake.
The brand’s sales were around $50 million last year, according to industry sources.
Most recently, McGrath created Louis Vuitton’s La Beauté makeup collection as its beauty director, raising questions over what that would mean for her brand.
“Being able to build beauty, but not just only beauty — a real world, a planet, basically — it’s been so much a universe, so much fun,” McGrath said at a press conference earlier this year of creating the La Beauté makeup collection.
