Cosmetics Co. Presperse Gets $2M DIP After Hitting Ch. 11 With Talc Deal
Cosmetics supplier Presperse won a New Jersey bankruptcy judge’s blessing Thursday to borrow $2 million in Chapter 11 financing, which the debtor will use to support its business as it works to secure confirmation of a $50 million plan to resolve lawsuits alleging its talc products contained asbestos.
Following a hearing, U.S. Bankruptcy Judge Michael B. Kaplan signed an interim order authorizing Presperse Corp. to tap $2 million of a $4.75 million unsecured credit facility provided by the debtor’s parent Sumitomo, a Japanese trading company. Presperse will be able to use the remaining funds if it gets Judge Kaplan’s final approval at a hearing scheduled for Oct. 2.
The debtor-in-possession financing will provide Presperse “additional cushion to weather weekly fluctuations in either cash receipts or expenditures that could occur due to unexpected market conditions or as a result of the filing of this Chapter 11 case,” it said in a court filing.
Somerset, New Jersey-based Presperse filed for Chapter 11 protection Monday with roughly $59 million in debt and a plan to settle some 275 talc-related personal injury cases pending against it.
In a declaration, Mehul Shah, chief financial officer of Presperse, said the company filed for bankruptcy as it faced a “mushrooming volume” of talc litigation and intends to win confirmation of a plan that would set up a $50 million trust for the benefit of current and future talc injury claimants.
Presperse restarted negotiations with committees representing current and future talc claimants early this year, and reached an agreement in March. Under that deal, Presperse and Sumitomo will provide $49 million in cash and $1 million under a promissory note to fund the trust.
“The debtor believes that the filing of the Chapter 11 case and the creation of a trust under Sections 105 and 524(g) [of the Bankruptcy Code] is most efficient and expeditious way for the debtor to ensure that holders of current and future talc personal injury claims are treated in a fair and just manner,” Shah said.
Presperse is the latest company to file for Chapter 11 bankruptcy with the aim of resolving talc-based litigation. Johnson & Johnson unit LTL Management filed two Chapter 11 cases in recent years seeking to settle lawsuits alleging talc in its baby powder caused cancer. It failed in both of its attempts at a bankruptcy settlement, and is now considering a third Chapter 11 filing.
Avon Products also recently hit bankruptcy as it faced hundreds of talc-related suits.
Presperse was founded in 1981 and sells more than 400 products. Shah said the company stopped selling talc products in the middle of 2023.
A representative of Presperse didn’t respond to a request for comment.
The debtor is represented by Morris S. Bauer and Drew S. McGehrin of Duane Morris LLP.
The case is In re: Presperse Corp., case number 24-18921, in the U.S. Bankruptcy Court for the District of New Jersey.
—Editing by Kelly Duncan and Covey Son.
