Los Angeles-based Dep Corp., a troubled manufacturer of beauty products, filed for bankruptcy-court protection Monday, citing its ill-fated purchase of the Agree and Halsa hair-care brands from S.C. Johnson & Son.
Dep listed liabilities of $77.3 million and assets of $83.9 million in its Chapter 11 petition filed in U.S. Bankruptcy Court in Wilmington, Del. Dep said the filing to restructure its long-term debt included a plan that provides for payment in full, with interest, to its secured lenders and its unsecured creditors. Chapter 11 allows a company to continue operating while it works out a plan to pay its debts.
Dep Chief Executive Robert Berglass blamed the filing on slumping sales of Agree and Halsa, which were purchased in 1993 from Racine, Wis.-based S.C. Johnson for $45 million and have since been the subject of lawsuits by both sides. After the acquisition, sales of Agree and Halsa plummeted to less than $25 million a year from $65 million a year, Berglass said.
Dep has lost money in nearly every quarter since the acquisitions. It wrote off $25.2 million in assets, began cutting costs and laid off about 50 people a year ago.
"Quite simply, the brands have not even generated enough sales to cover the principal and interest on the bank debt incurred as a result of the purchase," Berglass said. "Accordingly, it became clear that even though we were cash-flow positive, in order to remain a viable company, we had to restructure our debt."
Dep makes a variety of hair and beauty products under the brand names Dep, L.A. Looks, Agree, Halsa, Lilt, Topol, Lavoris, Natures Family, Porcelana and Cuticura. It employs about 300 people.