AM I NEXT? NO LOVE AT JULEP

Online cosmetics and personal care products marketer Seattle,Washington-based Julep has hit the skids and will be laying off 102 employees as they move their headquarters to New York City, New York and close their local stores.

This is a classic entrepreneurial tale where the story sells the concept, attracts significant venture capital, and then fails to scale or the parent company simply runs out of cash.

Julep, founded in 2007 by former Starbucks and Boston Consulting Group executive Jane Park, hit a rough spot when it was accused of using deceptive ‘negative option’ marketing tactics in their subscription box sales of beauty and personal care items and was ordered to pay a hefty fine.

The company was acquired shortly after the settlement by the New York City-based Glansaol in December 2016 with the intent to supplement the company’s portfolio of synergistic beauty companies. Glansaol (meaning pure life’ in Irish) was founded by former Revlon President and CEO Alan Ennis, an Irishman, and financed by the private equity firm Warburg Pincus to market beauty and personal care products and has filed for Chapter 11 pending the sale of certain assets to AS Beauty including beauty brands like Julep, Laura Geller,and Clark’s Botanicals.

According to a statement by Glansaol CEO Nancy Bernardini, “The board and management team have thoroughly assessed all of our strategic options and are confident that the proposed sale process represents the best path forward for the company. We are pleased to have entered into an asset sale agreement with AS Beauty and are excited for the company’s future.”

Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere ... are you now wondering, Am I Next?

AM I NEXT? NO LOVE AT VER (VIDEO EQUIPMENT RENTALS)

Glendale, California-based Full Throttle Films LLC, doing business as VER (Video Equipment Rentals), recently emerged from Chapter 11 bankruptcy and merged with Production Resources Group LLC to form one of the world’s largest suppliers of audio, video, lighting, cameras and rigging equipment to entertainment, broadcast, and corporate productions.

The company has announced that the integration and restructuring of the two companies will impact approximately 260 employees, 79 of which are located at their Glendale, California campus.

The consolidated company will be managed by The Jordan Company, GSO Capital Partners, and PRG Management with Jere Harris serving as chairman and CEO .

Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere ... are you wondering, Am I Next?

AM I NEXT? NO LOVE AT PRODUCT QUEST & EI SOLUTIONWORKS

Charlotte, North Carolina-based Ei SolutionWorks, a division of Daytona Beach, Florida-based Product Quest LLC, abruptly shut down their Kannapolis, North Carolina facility and laying off 296 employees. The company which develops, manufactures, and packages topical medicines, skincare products and other topical liquid, semi-solid, and loose powder products for the healthcare and other industries has ceased operations. The parent corporation, Product Quest, has also announced the layoff of 300 employees in their Holly Hill, Florida facilities.

Both facilities appear to have cross-contamination problems that resulting in the U.S. Food and Drug Administration warnings and the voluntary recall of some products.

The FDA noted that “machines used to manufacture pesticides were also used to manufacture medications and were not properly or thoroughly cleaned between batches.” In response to the company’s reply, the FDA wrote, “Your response is inadequate because it only addressed the potential for contamination of your drugs by the pesticides you were manufacturing in the same facility. You did not evaluate the potential cross-contamination of your human drugs with other human drugs you manufacture and have not demonstrated that your cleaning procedures ensure that your drugs are not cross-contaminated with other human drugs,” the notice said. “… Your response did not fully assess the effect of your failure to adequately investigate contamination on the quality and safety of your drugs on the market within expiry.”

The parent corporation, Product Quest, has filed for Chapter 11 Bankruptcy relief. A court filing by employees (Case 18-50946 Doc 36 Filed 09/12/18) alleges violation of the federal WARN act relating to mass layoffs and additional state violations.

Among the allegations, “Defendants’ business failures were caused by ineffective senior leadership, employee turnover, extensive product quality issues, the recall of products manufactured at the Daytona Facility, as well as stability, contamination, and regulatory compliance issues at the Kannapolis Facility. In the fall of 2017, Defendants suffered from severe financial and operational difficulties, including key vendors placing the company on credit hold. These issues were caused by poorly executed growth plans, which led to extensive inventory issues and significant subsequent write-offs. Additionally, Defendants suffered from operational cost overruns, ineffective production standards and poor pricing practices leading to significant margin erosion. Upon information and belief, as far back as September 2016, Defendants were in default under the terms of its senior secured credit facilities. Upon information and belief, at all relevant times, the Daytona Facility had consistent problems with quality control of the products manufactured there, no effective system in place for addressing these issues, and old equipment that did not comply with cGMP manufacturing practices.”

Clearly the handwriting was on the wall, if not for manufacturing process failures then from financial difficulties.

Are you wondering, Am I Next?