Pat McGrath Labs Files Bankruptcy, Secures $30M Funding

Pat McGrath Labs is a black-owned beauty brand founded by renowned makeup artist Dame Pat McGrath. It filed for Chapter 11 bankruptcy on January 22, 2026. However, secured a $30 million grant on February 17, 2026, which could shape it’s future as a luxury cosmetics brand.

The Miami-based company filed for bankruptcy in the Bankruptcy Court for the Southern District of Florida. It cited financial pressures amid a challenging retail climate and a strategic pivot following a previously planned sale that was later cancelled.

Recapitalization Deal Secured

In a court-approved agreement aimed at stabilizing operations, GDA Luma Capital Management, a firm that specializes in distressed assets, committed up to $30 million in new funds to help the company during its restructuring.

The financing includes two parts:

• $10 million in debtor-in-possession (DIP) funding to support daily operations during the Chapter 11 process.
• At least $20 million in working capital after the company exits bankruptcy.

Under the recapitalization agreement, GDA Luma will become the main equity investor once the bankruptcy is resolved. This will reposition the firm’s capital structure while keeping the brand active in the market.

Founder’s Role and Strategic Focus

As part of the changes, longtime founder Dame Patricia McGrath will step down as CEO and move to the role of Chief Creative Officer. She will continue to influence the brand’s creative direction and hold a significant equity stake.

GDA Luma’s leaders described the investment as the beginning of a new era of leadership and growth for the brand. They emphasized their commitment to combining creative excellence with sustainable operations.

Background: From Unicorn to Restructuring

Founded in 2015, Pat McGrath Labs quickly became one of the beauty industry’s most influential brands. It earned a reputation for runway-inspired color cosmetics and limited-edition releases that generated strong demand. At its peak, a minority investment by private equity firm Eurazeo valued the company at over $1 billion.

However, shifts in consumer preferences, increased competition, and other challenges lowered its value. Reports from late 2025 suggested that the company was preparing for a sale and possible asset auction before its bankruptcy filing halted those plans.

Court documents estimate the company’s liabilities between $50 million and $100 million, highlighting the financial difficulties that led to the Chapter 11 filing.

Outlook and Next Steps

The financing and restructuring give Pat McGrath Labs a chance to refine its business model and product plans.

According to filings and press releases, the company aims to accelerate new product launches starting in Q1 2026 and strengthen partnerships with key global retailers as part of its recovery plan.

For McGrath, the restructuring offers a chance to reset and a potential guide for long-term success in a crowded market.