We are advising Natura on its settlement with the Avon debtors and purchase of the Avon International business

Davis Polk is advising Natura &Co Holding S.A. and certain of its affiliates (collectively, “Natura &Co”) in connection with the chapter 11 proceedings of its non-operational subsidiary Avon Products, Inc. (API) and other non-operational Avon entities (collectively, the “Avon debtors”), including Natura’s coordinated settlement of the Avon debtors’ bankruptcy estate claims and a $125 million credit bid for substantially all of the Avon debtors’ assets.

Following the Avon debtors’ August 2024 voluntary chapter 11 filings in the United States Bankruptcy Court for the District of Delaware, the Avon debtors sought bankruptcy court approval for a settlement with Natura &Co and for Natura &Co to serve as stalking horse bidder with a credit bid of $125 million for substantially all of the Avon debtors’ assets.

The official committee of unsecured creditors appointed in the Avon debtors’ cases objected to the proposed Natura &Co. settlement and sale and filed motions seeking (a) to dismiss the Avon debtors’ bankruptcy cases and (b) derivative standing for the committee to pursue estate causes of action. Negotiations among Natura &Co, the Avon debtors and the committee resulted in the committee withdrawing its various objections and motions in exchange for a revised global settlement, pursuant to which Natura &Co agreed to, among other things, (i) increase cash contributions to the Avon debtors’ estates to approximately $34 million, (ii) fund in full the DIP financing, (iii) waive all secured and unsecured claims not being credit bid and (iv) leave certain other assets in the Avon debtors estate as part of the sale.

Both the global settlement and the credit bid sale were approved by the Honorable Craig T. Goldblatt at a hearing on December 4, 2024. Following the bankruptcy court’s approval of the settlement and sale, the Avon debtors expect to seek approval of a chapter 11 plan of liquidation to distribute their remaining assets to general unsecured creditors.

API is the non-operational holding company of the Avon beauty brand and of Avon operations outside the United States, which include more than 50 countries in five continents.

Natura &Co is a Brazilian cosmetics company, headquartered in São Paulo. Natura &Co connects more than 200 million clients worldwide, engaging them through nearly seven million dedicated consultants and representatives, 900 stores and franchises and 19,000 employees.

The Davis Polk restructuring team includes partner Darren S. Klein, counsel Josh Sturm and associates Amber Leary, Mariya Dekhtyar and Kevin L. Winiarski. The litigation team includes partner Elliot Moskowitz, counsel Marc J. Tobak and associates James C. Butler, Christina Costello and Thomas Hislop. The mergers and acquisitions team includes partner Michael Senders and associate Andrew R. Board. The finance team includes partner David J. Kennedy and associate Anmol Sheth. The intellectual property team includes partner Frank J. Azzopardi and associate Lachlan J. Forrester. Partner Manuel Garciadiaz is providing corporate advice. Members of the Davis Polk team are based in the New York and São Paulo offices.

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