Pat McGrath Labs has filed for Chapter 11 bankruptcy, halting a planned auction of the beauty brand’s assets and marking a significant moment for one of the most influential names in modern makeup. The bankruptcy filing allows the company to continue operating while it restructures its finances, according to sources familiar with the matter.

The bankruptcy comes weeks after reports that Pat McGrath Labs was being marketed for sale, with an auction of its assets scheduled by the brand’s secured lender. That auction has now been postponed indefinitely as the Chapter 11 bankruptcy process moves forward, giving the company time to realign its balance sheet amid mounting operational and financial pressures.

Company Says Operations Will Continue During Bankruptcy

EXCLUSIVE: Pat McGrath Labs Files for Chapter 11 Bankruptcy, Auction Cancelled https://t.co/vFzxCN08Vz

— WWD (@wwd) January 26, 2026

In a statement, a spokeswoman for Pat McGrath Labs said the Chapter 11 bankruptcy filing is intended to stabilize the business while preserving its creative and commercial foundation. “During this process, the company will continue operations in the ordinary course of business while working to restructure its balance sheet and to forge a path to thrive,” she said.

The spokeswoman added that despite the bankruptcy proceedings, Pat McGrath Labs remains focused on its customers, partners, and stakeholders. The brand, she said, will continue delivering its signature high-quality products and innovation, signaling that the bankruptcy will not immediately affect product availability or ongoing retail partnerships.

Planned Auction of Pat McGrath Labs Assets Put on Hold

As a result of the bankruptcy filing, Pat McGrath Labs’s secured lender has postponed a scheduled auction of the brand’s assets. The auction, which had been expected to take place this week, was being managed by Hilco Global after it was reported in December that the company was exploring a sale.

At the time, representatives for Pat McGrath Labs described the process as part of a broader restructuring and recapitalization effort, rather than a liquidation. The bankruptcy filing effectively pauses that process, shifting discussions into court-supervised negotiations that may allow the brand to avoid a forced sale.

Once-Valued at Over $1 Billion, Brand Faced Mounting Challenges

Once Valued At $1B, Pat McGrath Labs Goes Up For Auction. Can It Be Revived?

Read more: https://t.co/NBplOpqy59

— Beauty Independent (@beautyindie_) January 23, 2026

Pat McGrath Labs was founded in 2015 by Dame Pat McGrath, whose runway work and editorial influence reshaped the aesthetics of modern beauty. The brand debuted with Gold 001, a limited-edition gold pigment that sold out within minutes and established its reputation for theatrical, fashion-driven makeup.

In 2018, Pat McGrath Labs received $60 million in funding from Eurazeo Brands, a deal that valued the company at more than $1 billion, according to industry sources. Eurazeo was estimated to have taken a minority stake of between 5 and 8 percent. However, in the years that followed, the brand encountered operational difficulties, leadership changes, and layoffs as growth slowed.

Sales Declined as Competition Intensified

Industry sources estimate that Pat McGrath Labs generated approximately $50 million in sales last year, a steep decline from earlier expectations tied to its once-unicorn valuation. The brand, sold through Sephora, Ulta Beauty, and its own direct-to-consumer channels, has struggled to maintain momentum in an increasingly crowded prestige beauty market.

Eurazeo Brands has since quietly exited its investment, and the valuation of Pat McGrath Labs is now believed to be significantly lower than its peak. Those pressures ultimately culminated in the current bankruptcy filing as the company seeks to reset its financial structure.

Founder’s Louis Vuitton Role Raises Questions, Not Answers

Louis Vuitton launches its first makeup line, La Beauté, with beauty legend Pat McGrath as their creative director. 😍 pic.twitter.com/qFu1Y5NOg9

— MEFeater Magazine (@mefeater) August 24, 2025

Pat McGrath Labs declaring bankruptcy also comes as McGrath herself takes on a major external role as beauty director for Louis Vuitton’s newly launched La Beauté makeup collection. The appointment has sparked industry questions about how the founder’s expanded responsibilities intersect with the future of her namesake brand.

Speaking earlier this year, McGrath described the Louis Vuitton project as building an entire beauty universe. For now, Pat McGrath Labs maintains that the bankruptcy filing is a step toward long-term stability rather than an indication of decline.

Featured image: Steven Meisel

—Read Also