On January 26, U.S. makeup brand Pat McGrath Labs filed for Chapter 11 bankruptcy protection under the U.S. Bankruptcy Code.
In recent years, the brand has been the subject of ongoing industry speculation, including concerns over the supply of core products and broader questions surrounding its business operations. The filing marks a moment in which those uncertainties have formally surfaced through legal proceedings.
Auction Postponed as Company Chooses to Continue Operations
An auction of the brand’s assets, originally scheduled for January 27 by the company’s secured lender, has been postponed indefinitely following the Chapter 11 filing.
Under the restructuring framework, Pat McGrath Labs has opted not for liquidation but for the continuation of normal business operations while pursuing a financial reorganization.
In a statement, the company said: “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. 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.”
Liquidity Pressures Highlighted by Emergency Financing
Court filings provide further insight into the company’s financial situation.
Since early 2025, Pat McGrath Labs has faced liquidity constraints and has relied on short-term financing to stabilize operations. On January 25, the company filed an emergency motion seeking more than $1 million in financing to cover employee wages and payments to key vendors.
Previously, the company had secured a $17.5 million bridge loan from GDA PMG Funding LLC. However, it was unable to refinance or repay the loan within the agreed timeline. GDA has since asserted that the outstanding balance has grown to more than $43 million, a situation that ultimately led to the initiation of the auction process.
A Decade In, a Turning Point for a Once-Explosive Growth Model
Founded in 2015 by renowned makeup artist Pat McGrath, Pat McGrath Labs made an immediate impact with its debut product, Gold 001—a $40 multipurpose gold pigment. Sold in limited quantities with custom packaging, the product sold 1,000 units in just six minutes on the brand’s website.
The brand quickly gained momentum through limited-edition drops and bold, runway-driven visuals. In 2018, it raised $60 million in external funding and was reportedly valued at more than $1 billion.
However, as competition in the beauty market intensified and consumer purchasing behavior shifted, operational pressures began to mount. In recent years, the company has undergone leadership changes and workforce reductions, signaling a reassessment of its growth trajectory. Industry sources estimate the brand’s most recent annual sales at approximately $50 million.
Brand Activity Continues Despite Restructuring
Despite the financial restructuring, Pat McGrath Labs has not gone quiet creatively.
Across Pat McGrath’s social media platforms—followed by approximately six million users—the brand continues to share behind-the-scenes content from Paris Couture Week Spring 2026, including runway makeup for Schiaparelli. The footage shows McGrath herself actively leading the makeup direction, underscoring the continuation of her creative involvement.
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In parallel, McGrath was appointed last year as beauty director of Louis Vuitton’s new beauty line, La Beauté Louis Vuitton. The debut lipstick collection, LV Rouge, launched in 55 shades and retails at €140 / $160 per unit, drawing significant attention for its positioning at the high end of the luxury beauty market.
What Lies Ahead in the Rebuilding Phase
As celebrity-led beauty brands such as Rhode and Rare Beauty continue to gain traction through strong community-building and digital reach, brands lacking operational and financial resilience are increasingly being forced out of the market. Former cult favorites Ami Colé and Cover FX have both announced closures, citing declining sales, tariffs, and shifts in global market conditions.
Against this backdrop, Pat McGrath Labs now enters a critical rebuilding phase. Chapter 11 provides the company with time—but not immunity—to redesign its financial foundation and supply chain. The central question moving forward is whether the brand can translate its core strength—high-fashion artistry—into a business model capable of matching the speed, scale, and execution demanded by today’s beauty market.
The outcome will not only shape the future of Pat McGrath Labs, but may also offer broader lessons for the evolving luxury beauty industry.
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