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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{ 13 comments… read them below or add one }
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.
Hot debate. What do you think?
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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.
Well-loved. Like or Dislike:
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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.
Well-loved. Like or Dislike:
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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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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
Hot debate. What do you think?
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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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How can sales fall if people see VALUE in the products??????
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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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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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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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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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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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