Avon files for bankruptcy amid lawsuits over cancer-linked talc products
What's the story
Avon, a once-dominant direct sales firm valued at around $21 billion, has filed for bankruptcy due to 200 lawsuits linking its talc-based products to cancer.
The US-based holding company, Avon Products, is seeking Chapter 11 bankruptcy protection "to address its debt and legacy talc liabilities," according to a company press release.
Despite ceasing product sales in the US in 2016 following a divestment of its North American business, Avon continues operations in international markets like Europe and Latin America.
Product controversy
Talc products face scrutiny
Avon has been using talc, a mineral linked to cancer, in its face powders and eye shadows.
The company is currently facing numerous lawsuits alleging that it sold talc products contaminated with asbestos, another carcinogen.
Despite these allegations, Avon has denied claims that its talc products cause cancer.
The firm insists it "only uses cosmetic grade talc which has been tested to confirm that it does not contain asbestos."
Strategic move
Bankruptcy filing aims to maximize asset value
John Dubel, Chairperson of Avon Products, stated that the bankruptcy filing, "will maximize the value of our assets and enable us to address our obligations in an orderly manner."
Avon CEO Kristof Neirynck echoed this sentiment, emphasizing their focus on advancing their business strategy internationally.
This comprises modernizing their direct selling model and reigniting the brand for growth acceleration.
Legal repercussions
Avon ordered to pay millions in damages over talc products
In December 2022, a Los Angeles jury ordered Avon to pay over $50 million in damages to an Arizona woman, who developed cancer after using its cosmetic products containing talc allegedly tainted with asbestos.
More recently, a Chicago-area man working at an Avon manufacturing plant was granted $24.4 million following his mesothelioma diagnosis.