Thanks to my quantum philosopher pal David for this great tip — an app for getting bargains on food.  Not for billionaires, clearly . . . but read this review if you’re on a budget — or simply want to get a little exercise walking to local restaurants and supermarkets and cut down on food waste.  Cheaper than a Peloton.

Some of you know Revlon has filed for bankruptcy.  Some of you know I wrote a biography of Revlon founder Charles Revson.  Some of you wrote when you saw the news to ask what I thought.  And, upon reflection, I do have a thought: namely, that it’s a perfect example of the evils of “financialization.”

Charles Revson built a great company on the strength of his passion for the best possible product that would most wow and please his customers.  No detail was too small.  Ron Perelman wrecked the company by having a passion for squeezing every last penny out of the business for himself.

Matt Levine, in his newsletter, gives a little flavor of it . . . too fun not to excerpt.  But the point is: this is not about lipstick or nail polish or fragrance, not about marketing, not about making a fortune by  making women feel good about themselves.  It’s about money.

  • . . . In 2016, Revlon Inc. borrowed $1.8 billion from some banks and hedge funds using a seven-year term loan secured by Revlon’s assets. Citibank NA advised on the loan and served as its administrative agent.

  • In 2019 and 2020, Revlon took some of the collateral for the 2016 term loan and snuck it out, away from the lenders: It put much of its intellectual property, including brands like American Crew, Elizabeth Arden, Almay and Mitchum, into new subsidiaries (generally called “BrandCo”) that did not secure the 2016 loan. It borrowed some new money secured by those brands, and rolled some of the old term lenders into the new facility in order to get them to vote to approve it. There were various shenanigans involved, including doing a new revolving loan under the 2016 credit agreement in order to get just enough votes to approve the new deal. We have discussed the basic form of this many times before: If you are a company in trouble, you pay off 51% of your lenders to get them to approve hosing the other 49%. That’s what happened here: Revlon gave some of its lenders a new loan with better security (those brands), making the security for the other lenders worse. (This is explained in more detail here.)
  • The 2016 lenders who didn’t participate in the new BrandCo deal were annoyed: Their collateral had disappeared, and now they were effectively junior to the 2020 lenders. They sued Revlon, Citibank and various other people, claiming that the BrandCo deal violated the 2016 credit agreement and was invalid. If they won … I dunno, it would be a mess if they won, but generally speaking if they won then they would get those brands back as collateral for their loans.
  • The day before they filed that lawsuit, Citi paid them off by accident. Oops! This was very funny and we have talked about it a lot, but the gist is that Citi, as administrative agent for the loan, was supposed to pass along a small interest payment from Revlon and accidentally paid off the whole loan with its own money.
  • Citi politely asked the 2016 lenders for the money back, but the lenders were really mad at Citi for helping with the BrandCo transaction, so some of them — who had gotten about $500 million of Citi’s money — said no.
  • Citi sued them and, somewhat shockingly, lost.
  • Citi appealed. I assume Citi will win on appeal, but then I assumed they’d win in the trial court so who knows. The appeal is still pending and could take a while.. . .

And so on.

A good segue to the biography I’ve just begun to listen to, and that I’ve previously plugged: The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America—and How to Undo His Legacy.

The hearing was devastating.  Next one scheduled for Thursday.



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