Arbonne Bankrupt

by louabbott on February 1, 2010

According to a post at Chapter11Library.com on January 27, 2010, Arbonne is upside down by more than $500 million …

Natural Products Group, LLC filed for chapter 11 today at the United States Bankruptcy Court in Delaware. The debtor is a manufacturer and distributor of personal care products. The debtor operates through Arbonne of Irvine, CA and Levlad of Chatsworth, CA. For the 12 month period ending November 30, 2009, Arbonne had approximately $378 million in revenue. For the same period, Levlad had approximately $73 million in revenue.

According to court documents, the debtor’s consolidated balance sheet reflected assets of approximately $286 million and liabilities of approximately $804 million. (as of 11/30/2009)

The largest unsecured creditor is listed as Wilmington Trust FSB with a bank loan claim of approximately $202 million.
# Debtor Name: Natural Products Group, LLC
# Year Filed: 2010
# Jurisdiction: United States Bankruptcy Court / District of Delaware
# Asset Size: 100,000,001 to 500,000,000
# Case Number: 10-10239

Natural Products Group, LLC is the holding company for Levlad, LLC  and Arbonne International, LLC.

Levlad is a leading manufacturer and marketer of branded natural and organic personal care products, under the brand names Nature’s Gate(R) and Nature’s Gate(R) Organics(R), which are sold through specialty retailers.

Arbonne, based in Irvine, California, markets its own brand of herbal and botanical personal care products through MLM (multilevel marketing).

Our sympathies are for the thousands of independent consultants for Arbonne who have counted on the company to have their best interests at heart.

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{ 36 comments… read them below or add one }

Evie Cook September 1, 2013 at 7:44 pm Thumb up 0 Thumb down 0

Whew! As an outsider, who had other reasons for just looking at what Arbonne was all about (and stumbled on the whole bankrupt thing and was shocked) I got the most out of the posting by Peter Arnold, CLU, CFC / Founder, Business Achievers Academy / Canada.

It seems like Arbonne itself did well, and higher ups mismanaged bigtime. Sort of like the US Post Office going along doing its thing and Congress just takes 4 Billion dollars from them and then leaves them to figure out how to let people go to stay solvent. I am no business mogul or legal-beagle but that’s what it sounded like to me.

I had a brush with Arbonne products and it was actually delightful. I didn’t have the money to buy it from a friend so just never did. It smelled great, felt great, her skin did look good and she was the type who doesn’t let a “…paraben” into her home.

If my understanding is close enough, that sort of activity pulled by the higher ups does not ever come out OK. I’ve seen this in other establishments–that’s not new to me. So why not hang it on the ones who actually DID screw it up?

in only reading about this now I’m a couple years late but still, in my mind those who did the dirty deeds need to pay, not the consultants and people who put their effort and passion into a good product.

Plus, it take a long time to go so many millions into debt. There was plenty of time to deal with it. Then Boom, it adversely affects many innocent, loyal and supportive people. That’s the thing about bankruptcy–get away with your continued (and maybe intentional?) financial “crimes,” hurt your creditors, even ruin some lives, and come back all happy and refreshed that you didn’t have to take responsibility for your stupidity, bad management or bad intentions. Not my cup of tea. Whoever really DID drive the thing into bakruptcy are the ones who need to be exposed with some fanfare so the truth comes out.

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tess December 6, 2012 at 10:03 pm Thumb up 2 Thumb down 2

Not sure how they are bigger. They have never broken their sales in 2006. 2012 is still hovering around 1/3 what they did in 2005-if that. So back then they were only in North America. Now is is NA, plus Austrailia and UK. Pity that the sales are not higher. The writing is on the wall

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krystie May 13, 2012 at 8:43 pm Thumb up 2 Thumb down 4

It’s 2012… Arbonne is bigger, and stronger than ever!!!

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Momo April 14, 2012 at 10:55 am Thumb up 5 Thumb down 2

I have been using Arbonne for a while now and have grown to love the products they sell. I am saving almost 75% then what I was using that I bought at our local mall department store. My skin is not breaking out from the junk that is in most of todays products and cost less than the local health food stores products. I started with Skin care and now use the Health and Wellness. I would have to say since it is still up and thriving that it must be doing something right. We as a country are trillions in debt and it doesn’t make us bad people. At Arbonne much has been learned from the mistakes and changes have happened. I will continue to use Arbonne and hope they are around for a long time!

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jessie March 15, 2012 at 8:19 pm Thumb up 4 Thumb down 1

I heard the sales were still only around 300 million. That is before they have paid themselves, consultants and suppliers. Also remember they are owned by banks and still carried over 250 million in debt from Chapter 11. They were at 850 million debt but then they did the Chap 11 deal. Owned by banks.

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Leah February 25, 2012 at 6:38 am Thumb up 2 Thumb down 3

The rumours you hear about department stores are 100% incorrect. Arbonne are an ultra-premium product and will never put their product on the shelves with those economy standard products that put all their money into Advertising but not much at all into their ingredients and forumlations. You have proabaly heard that Arbonne will be putting their stock on shelves and are going bankrupt from a competition company who is envious of Arbonnes huge Business Growth in the last couple of years. Out of 180,000 Direct Selling / Network Marketing companies in the world, Arbonne is in the top 40. Every other company in the top 100 list is in at least 38 countries. Arbonne is in 4. So again, highly likely you heard the rumours that are clearly untrue from a competitor. Arbonne is also about to go into 2 more countries in 2012. Arbonne has never been stronger and is leading the way in the NWM business plan.

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louabbott February 25, 2012 at 8:14 am Thumb up 5 Thumb down 2

Leah – you sound like you have real knowledge about Arbonne’s condition. I certainly much prefer that to uniformed opinions or rumors.

Can you tell us all how you know that “Arbonne has never been stronger?” What are the annual revenues now, compared to before the bankruptcy was filed?

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Jen Morris February 19, 2012 at 7:40 pm Thumb up 1 Thumb down 0

From what I have heard recently, the creditors that now own Arbonne are going to start selling Arbonne through Target stores to help with the overwhelming debt that Arbonne is in.

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Kealee Giese December 5, 2011 at 8:56 pm Thumb up 2 Thumb down 5

Arbonne is the best skin care company I have found to this day. Every product I have tried, I have loved because they work and work well. Anyone who does research on the product knowledge will see that every ingredient is researched to the fullest. I cant say this about any other company out there and I work for another very large botanically based company. I have been using Arbonne since 2004 and have only been pleased with what they have to offer. Arbonne will last because their products are the only thing that keeps me feeling great. So glad that there are people out there who care enough to research what we put on and in our bodies. Im not concerned with their business issue, I hope they have it figured out because I love this company for all the integrity they put into thier name. Intelligent people will carry this company through. And, intelligent people know how to treat people; and that doesnt involve speaking negatively. I wish Arbonne the best as I am ordering more products right now because its the only stuff I have found that keeps my ass looking perfect! So, enjoy your ugliness Haters!!

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Tony November 13, 2011 at 3:41 pm Thumb up 2 Thumb down 0

Hi, seems Arbonne made it through the rough patch (2010), however new rumours have surfaced saying they are Bankrupt?

Any truth to this?
thanks

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jessie June 11, 2011 at 9:28 pm Thumb up 1 Thumb down 0

Just heard the head guy from Arbonne Canada corporate was let go. Who else are they getting rid of now??

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Graci May 5, 2011 at 10:29 am Thumb up 4 Thumb down 0

So now that Rita davenport retired or was fired, who will have the drive that she had. Why would she leave if she always said, she would die first then retire. Something isn’t clear with this

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Integrity Counts December 10, 2011 at 12:24 pm Thumb up 5 Thumb down 2

Rita’s contract was not renewed by Kay. No party. No Tiffany jewelry memento. No honoring her for her LONG years with Arbonne. No chance for Consultants to say farewell. Zip. Kay stands to get a huge bonus if she builds the company to a certain level, it is said. ..and then bye bye. No love lost. The products are no longer ANYTHING Swiss. The amounts in the containers keeps diminishing. The prices climb. No more $5 bonus products. No more caring considerate Petter (founder). More stringent quotas. There didn’t use to be any at all. Please get hold of the complete list of ingredients of the products and do your research. Pure, safe and beneficial? Several ENVPs were dumped (as in no more income from their hard earned business-building) because they sincerely questioned corporate about some of the ingredients. Very sad.

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Merrily rowing along December 1, 2010 at 11:41 am Thumb up 4 Thumb down 0

These products have no petroleum in them, and are pure, safe and beneficial to use.
Don’t be pushed by your problems, be led by your dreams makes absolute sense.

It was smart to restructure for this International player at a time when we see companies who didn’t, fall into the clutches of the US Government.

The compensation plans of all Consultants has not changed.
The new GTC trip to Las Vegas and to Atlantis is certainly worth my effort.
Hope you wake up soon, and I see you there.

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Vero April 15, 2010 at 9:24 pm Thumb up 3 Thumb down 6

Hello

I am an Arbonne Consultant, and with all the work that Arbonne is doing to rebuilt the company, I truly believed that they will be out of dept in no time. They do have one of the best anti-aging skin care product. And i’ve never been so happy in my life being an independent consultant for Arbonne!!! I love the product and I believe in the company. I dont say they havent made error in the past but they do are working real hard to fix the problem.

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mary April 2, 2010 at 8:52 pm Thumb up 5 Thumb down 8

Well, we are out of chapter 11 and ARbonne is set to hit 2 billion dollars next year. Everyone loves the new re9. You will see that we will make it.

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KL March 12, 2010 at 2:33 am Thumb up 22 Thumb down 3

CBH

Just because you “chose” to sign up as a consultant and spend over $300 on product and then “not use” the product, is nobody’s fault but your own. This doesn’t mean that Arbonne is a bad company or that their products are bad. Just because someone pays the signup fee to get the discount on products doesn’t mean you have to spend that much money. You could have still signed up just to be able to buy at a discount and spend way less then $300 so again, that’s on you.

For anyone who has read about Arbonne’s products they know that one of the most important things about their products is the quality/natural ingrediants because of the higher standards in the manufacturing of the products. Arbonne’s products are formulated in Switzerland where standards are much much higher. Products formulated in the US put claims on their products that simply are not true. Something claimed to by hypoallergenic or all natural in the US would never pass in Switzerland.

People go to places like Nordstrom’s and other high end stores and spend just as much money if not more on skin care products but just because Arbonne is a MLM people want to say its a scam or their products aren’t worth it.

You don’t have to be a supporter of MLM but doesn’t mean people should be putting down the products that are clearly top of the line.

And by the way, I don’t sell Arbonne but I do use it and have several friends that use it.

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David Schultz March 13, 2010 at 8:38 am Thumb up 6 Thumb down 0

Fair article however, a little defensive perhaps. A friend of family was a Arbonne distributor earned a car too. No need to get defensive though… plenty of fish in the sea.

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Dont' like either March 19, 2010 at 10:34 am Thumb up 3 Thumb down 1

Their products aren’t the issue. Loading up with debt is the problem. If If they had managed their debt at reasonable levels (not 3x total assets) they wouldn’t have any problems at all.

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Patti April 17, 2010 at 10:11 am Thumb up 4 Thumb down 6

Hellllooo! Did you not read the info above that stated “Arbonne itself has been a money maker”…Big problem w/parent company…yoohoo, nothing more to say to you!

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CBH March 11, 2010 at 1:22 pm Thumb up 7 Thumb down 3

I was never an Arbonne consultant, but purchased some products and I allowed myself to be talked into being a “consultant” to get my products at the consultant rate. (Not smart on my part, but I’m learning). The following year, I didn’t renew my contract and to this day I still have the products that cost me nearly $300.00, with all the fees, shipping and handling, it was just completely outrageous! I think about all the women who get sucked into these Direct Marketing sales. You get invited by your co-workers, friends, and family and end up spending way too much money, all because you wanted to help out that friend. My new mantra, NO! No, to D.M “parties”, I have a “No soliciting” sign at my door. If I need something I go to a store in my town, if they don’t carry it, I order on the net.

Eventually, when I didn’t renew, I had my name removed from Arbonnes email list, but received an email in January that I didn’t pay much attention to. And then today received another, (printed below). That’s when I did some internet searching to find out exactly what it meant. The email reminds me of an acquaintance of mine who filed bankruptcy about a year ago and how they were so relieved to not have that dept on them and they could start all over. I just learned recently that that acquaintance said that they were so happy because by spring they will be able to get another Harley. How is that so?

To Jesse – I love the “Big hat, no cattle!” I’ve never heard of that before!

Here’s the Arbonne email:

March 5, 2010

Dear Arbonne Independent Consultant,

I am very pleased to report that we have now completed the financial restructuring we initiated in late January to strengthen Arbonne financially and ensure that our company is well-positioned for the future.

Our “pre-packaged” Plan of Reorganization was confirmed by the U.S. Bankruptcy Court in Wilmington, Delaware, on February 22, 2010, and became effective on March 5, 2010. This means that Arbonne, along with our parent company, Natural Products Group, Inc., and related entities have all officially emerged from the Chapter 11 reorganization process. We are pleased that this was accomplished ahead of schedule, just 37 days from the initial filing.

Our successful implementation of the restructuring plan has reduced our outstanding debt obligations by more than 80 percent, allowing us to continue investing in our growth and developing new business-building tools and innovative products for you and your Clients.

As part of the conclusion of this process, the Company has prepared a legal document designated as the “Combined Notice of Confirmation, Effective Date, and Bar Date.” The distribution of this Notice to a wide range of parties is customary. This Notice includes important information about the restructuring, including key dates and deadlines for anyone who intends to file a claim. To view this Notice and related information, please go to http://www.NPGInfo.com/CombinedNotice. Court filings and claims information are available at http://www.NPGInfo.com. If you are unable to access these materials on the Internet, please call (877) 788-2814 toll free in the U.S. and Canada, for further assistance.

Sincerely,

Kay Napier
CEO, Arbonne International, LLC

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Julie August 7, 2010 at 9:10 pm Thumb up 2 Thumb down 2

I am not sure why it’s not smart to sign up to get a discount, especially if it’s something I’m going to use. I would rather get a discount if it’s available. (Think of a store like Costoc where your membership allows you to buy in bulk for less-usually). Signing up to get the discount allows you to buy as much, or as little as you choose without any obligation to sell anything.

Arbonne also has a 45-day money back guarantee so you had the opportunity to return your product for a full refund. You would have been out the shipping cost however.

Why is is so much better to shop at a traditional store or on-line? I like to shop at local stores and I also like to help other home-based businesses IF I like their products/services. Why would it be bad for me to buy from my Pamered Chef consultant rather than go to a kitchen store if they have great products that are guaranteed and delivered to me at my home. With direct sales/network marketing companies you are also helping a friend, neighbour, or maybe even someone you don’t know who is an independent distributor for that company – how is that so bad? If I don’t like those products then I don’t buy them and go elsewhere.

I am an Arbonne Consultant and hope my clients and customers will continue to shop with me because they like/love the products and the service I offer. If not then I help them exchange or return their products (and while the shipping is not refundable I have been the one to pay for the return shipping, not my customer).

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jessie February 9, 2010 at 7:16 pm Thumb up 13 Thumb down 1

Only time will tell. My thing, is how do you explain this to a new prospect. Unless, someone has been living under a rock, a debt that high is not to be taken lightly. How do you get a business builder to jump on board. Yes, they have been giving these trips, jewellery and things away but it has been on credit. Big hat, no cattle!!!!!!!

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Karl Stuetzel February 5, 2010 at 8:01 pm Thumb up 6 Thumb down 5

How can sales fall if people see VALUE in the products??????

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Thos February 6, 2010 at 4:04 pm Thumb up 4 Thumb down 3

How about… they were first to market with a technologically advanced anti-aging product, and pushed it into the market by exciting a lot of people with an unsustainable compensation model.

Now we’ll see if the company will grow sound business with its good products, or try to spark yet another ephemeral wave.

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Dont' like either March 19, 2010 at 10:30 am Thumb up 3 Thumb down 2

Because a fewer and fewer people are seeing VALUE in those products. A lot more people saw “value” in them back in ’07 than they have since. That’s usually why sales fall in any company.

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Consul February 3, 2010 at 11:51 am Thumb up 28 Thumb down 5

Obviously, this is a chapter 11 bankruptcy filing, and so the comment that the company is not “bankrupt” is completely off base. This is a continuation of false information put forward by people shilling for the company over the years (see Arbonne reps’ standard line: “Arbonne is a 26-year-old, debt-free company with Dun and Bradstreet’s highest credit rating” available on the company website and elsewhere – http://www.arbonne.com/company/opportunity/people/eoa.asp?vp=wurgler_d). Arbonne and its parent were carrying a huge debt load since 2006, and could not service the interest on the debt.

Suggesting that the lenders are “willing to forgive their debt” is equally misleading. The lenders have no choice, and are being forced to write-off a major portion of the debt by the bankruptcy process. They are owed $750M, and are being stiffed by a borrower that cannot pay. So the company is going to give the lenders 85% ownership in the company, warrants to acquire another chunk of stock, and reduce the loan amount to $125M. This is the corporate equivalent of the bank foreclosing on your home. The bank owns it now.

The bankruptcy court disclosure statements filed by the company reveal that they project that they will lose money in 2010, even with most of the debt written off. They project a small profit in 2011, but that assumes that sales at Arbonne grow by 7% in 2010 and 5% in 2011. [see Disclosure Statement, Schedule 7, p. 8]. How does that compare with actual sales trends?

2007 Sales: $722,494,000
2008 Sales: $569,157,000
2009 Sales: $370,993,000

Actual sales have declined significantly for two straight years. In order to generate enough money to pay the expenses (including interest on the projected $145M in new debt, post-bankruptcy), the company will need to reverse the sales decline and grow by more than 12% over the next 23 months. How likely is that given the bankruptcy, the current economic climate, and the impact that these events will have on the “consultant” base?

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louabbott November 14, 2011 at 11:43 am Thumb up 2 Thumb down 0

Consul – do you have any more recent information as to Arbonne’s financial situation?

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Peter Arnold February 2, 2010 at 10:10 am Thumb up 32 Thumb down 16

Hey Lou:

First, my thoughts are always with the Reps (Consultants, in this case) – who usually are the biggest victims when a situation like this happens.

However, from what I hear, this may well get resolved in a way that brings about a much ‘stronger’ Arbonne in future – lets hope so!

My understanding is that part of the restructuring may include using $20 million to pay off, or down, some of the unsecured debts or other costs.

But when you look at just the “Arbonne” division irself, they were not the issue. They have been making a profit year in and year out. It is the parent company – NPG – which was using the profits generated and had no background in MLM. They saw the big money rolling in and used it for dividends and other costs. And if we go back ‘before’ Harvest Partners, the same thing was going on.

Arbonne itself has been a money “maker”, and the Equity Partner used it all, instead of paying down the debt load from the leveraged buyout.

If Arbonne prints off the filing, they can show where Arbonne earned $230 plus million last year – and had a net profit of $30 plus million. It was not the Arbonne division that causes the parent company to file for bankrupcy (just like it was not Primerica’s fault that Citi Group leveraged themselves too much, and had to take a handout from the Government). Like Primerica, Arbonne could come out of this stronger than ever.

When lenders are willing to forgive their debt ($680 plus millions) for a diluted equity state in the new company – which will include Arbonne (and their little sister company, who creates organic products) – and will be worth less than $300 million – it shows that the lenders believe in the current leadership team, products – and most of all, the field force.

As I understand it, Arbonne has many top rated (although expensive) products – and an excellent research and development team – untainted brand – and most of all, a database of some of the most respected, well trained Distributors (Consultants) in Direct Selling. It likely would have been more advantageous for the lenders to have forced the company into Chapter 7 – selling off the everything – splitting up the cash – and writing off the rest. However, instead, it seems that they are willing to risk it all, and move to a whole new level.

It would seem that Arbonne is not starting over – it is just restructuring their strengths and shedding the losses.

And when you look at the two great ladies who ‘run’ Arbonne – CEO, Kay Napier, and President, Rita Davenport – I believe these two women love Arbonne, and the family who has built it.

Sincerely / Peter A.

Peter Arnold, CLU, CFC / Founder
Business Achievers Academy / Canada

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Robert Taylor February 2, 2010 at 3:52 am Thumb up 45 Thumb down 39

What a joke. You guys are putting positive spin on a bankruptcy, so you can continue to entice gullible idiots into joining Arbonne. The products literally stink, and the prices are 4 times what might be considered reasonable. At least Amway’s soap is good soap. Arbonne’s stuff is just junky.

Gee gads, only a warped MLM freak could put a positive spin on a bankruptcy.

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Stephanie Hutchinson March 8, 2010 at 7:22 pm Thumb up 20 Thumb down 5

Wow! That’s great that you love amway! However, you talking bad about another company just makes you look like the idiot! I have had experience with amway and can’t say that it was a good one, but I would never talk the way that you have! People thrive in all kinds of NW companies! You talking bad about other companies is a major turn off for people looking for an opportunity! Amway has had major problems in the past!! Maybe you should think about that before you talk about Arbonne!

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Dont' like either March 19, 2010 at 10:27 am Thumb up 6 Thumb down 4

Lol – Amway hasn’t had to screw it’s creditors over. I’m not a fan of either company, just sayin’ that Arbonne has made several strategic errors, and those errors have impacted real investors that had the perfectly reasonable expectation. Maybe “turning off” people looking for an “opportunity” in that vehicle is exactly what is needed.

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Maggie Kress February 1, 2010 at 9:24 pm Thumb up 4 Thumb down 20

This is a sad day to see this company join the group of overspending. It is so easy to do with credit available. I feel for the distributors that have given their time and money to have a home business and see it gone in an instant.

Please do not give up your dreams. There are still companies that can still help you realize your dream. I would love to hear from anyone that feels that they have nowhere to go. I can share with you some ideals. When I help others, I help myself so that makes us both winners.
Wishing you a better future and God Bless
Maggie Kress
417-426-5931

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John Counsel February 1, 2010 at 5:54 pm Thumb up 12 Thumb down 3

The way I read the reports, it’s a technical manoeuvre to restructure debt with the support of the creditors. Arbonne expects to be out of Chapter 11 in 60 days.

Not exciting news for distributors, but not devastating as long as all goes to plan. The real issue, long term, will be its new ownership by what looks to be fund managers inexperienced in MLM.

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louabbott November 14, 2011 at 11:41 am Thumb up 0 Thumb down 0

John – how are you? Do you have any further information as to how Arbonne is doing more recently?

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louabbott February 1, 2010 at 5:45 pm Thumb up 20 Thumb down 17

In the interest of reporting accurately and representing all views, Michele McGeeney from New Braunfels, Texas immediately emailed this to me:

“We filed Chapter 11, restructure of debt. We are not bankrupt.”

Whatever a person chooses to call it, news like this will make it extremely hard to recruit new reps. The top leadership will spin it positively to try to keep as much of their organizations intact as possible. Much of the middle level leadership will have to give up and leave–whether they initially want to or not–after their checks are decimated (been there-done that). Survival of the company will depend on whether Arbonne has enough loyal customers to produce enough revenues to become profitable after all the balance sheet, business restructuring, and cost-cutting is done.

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