Pat McGrath Labs Files Chapter 11 Bankruptcy

Pat McGrath Labs, once one of the most celebrated names in the global beauty industry, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Florida on January 22, 2026, marking a major shift in the brand’s decade-long rise and recent struggles. The move comes as the company aims to reorganize its finances amid mounting market pressures, supply chain challenges, and evolving consumer demand.

Founded in 2015 by Dame Pat McGrath, widely regarded as the world’s most influential makeup artist, the brand quickly became known for its bold, richly pigmented cosmetics and runway-inspired product launches. Its early success was driven by limited edition drops – most famously the “Gold 001” pigment – that sold out within minutes, creating a cult following and positioning the brand as a must-have luxury label.

Unicorn Status and Market Reality

By 2018, Pat McGrath Labs had achieved unicorn status with a valuation of over $1 billion after a minority stake sale to French private equity firm Eurazeo. The milestone elevated the brand’s profile and made McGrath one of the richest self-made women in the beauty world.

However, sustaining that valuation proved difficult over time, and investors gradually pulled back as the brand struggled to keep pace with shifting consumer tastes and competitive pressures.

In the years leading up to the bankruptcy filing, stakeholders reported declining sales growth, ongoing layoffs, and a slowed pace of product innovation — factors that contributed to diminishing retail presence and lower investor confidence. A planned auction of the company’s assets set for late January was abruptly halted when the Chapter 11 filing was made, giving the brand more time to pursue a strategic restructuring rather than liquidation.

Chapter 11: A Reset, Not an End

Chapter 11 bankruptcy does not mean the end of Pat McGrath Labs. Instead, it permits the company to continue operating while reorganizing its debts, simplifying its capital structure, and exploring strategic options – including potential new investment, a sale, or a broader financial restructuring plan. The bankruptcy filing estimates the company’s assets and liabilities in the range of $50 million to $100 million.

Operational Continuity

Pat McGrath Labs has stated that it will maintain regular business operations during the Chapter 11 process, including keeping products on shelves at major retailers such as Sephora, Ulta Beauty, Nordstrom, and others.

The company also plans to continue paying employees and vendors in the usual course of business, emphasizing its commitment to customers and partners.

Why This Matters to the Beauty World

A Reflection of Industry Shifts

The bankruptcy of such a high-profile brand highlights broader shifts in the beauty industry. Trends have moved toward clinical skincare, multifunctional products, and brands that can rapidly scale into global markets with repeat purchase categories.

Pat McGrath Labs, rooted in artistry and luxury makeup, faced challenges aligning its traditional product focus with these changing consumer behaviors – particularly for categories like eyeshadow that are purchased less frequently.

Industry analysts also point to operational bottlenecks stemming from centralized decision-making – a structure in which McGrath herself had final say over many aspects of the business – as factors that may have hindered agile responses to market changes.

Influence Beyond Bankruptcy

Despite the corporate restructuring, Pat McGrath herself remains a revered figure in beauty and fashion. In 2025, she was appointed Creative Director of Makeup for Louis Vuitton’s La Beauté line, demonstrating her continued influence and demand within the luxury segment of the industry.

Many industry observers believe that McGrath’s personal brand and creative stature will remain assets for any future direction the company takes, whether through new investment, a pivot in strategy, or a reimagined product portfolio under fresh ownership or leadership.

Read: Inside the 2026 Oscars Nominees Luncheon Celebration

What Comes Next

As Pat McGrath Labs navigates the Chapter 11 process, several outcomes are possible: a financially stronger restructured company, acquisition by another beauty entity, or entry of new strategic partners. For consumers, day-to-day retail availability of products is unlikely to change immediately, but the brand’s long-term roadmap will likely emerge through restructuring negotiations throughout 2026.

Ultimately, the story of Pat McGrath Labs serves as a powerful case study of how even the most iconic, well-loved brands must adapt to the evolving dynamics of the beauty industry, balancing artistry with scalable business strategy to survive and thrive.