Natural Products Group LLC, owner of direct-sales skin care and cosmetics brand Arbonne International and natural personal care brand Nature’s Gate, filed for Chapter 11 bankruptcy protection in Delaware on Wednesday.

This story first appeared in the January 29, 2010 issue of WWD. Subscribe Today.

Natural Products Group opted for Chapter 11 to embark on a restructuring plan approved by 90 percent of the company’s bank debt holders that would cut its debt obligations by more than 80 percent. In court documents, the company’s total liabilities are listed at $804 million and its total assets at $286 million. The bankruptcy is expected to last 45 to 60 days, according to Natural Products Group.

“This is a major milestone in our strategy to position the company for continued growth and increased profitability,” said Kay Napier, chief executive officer of Arbonne International and president of the Natural Products Group. “I am deeply gratified by the enthusiastic support of our lenders to reduce the company’s debt substantially and increase our financial flexibility.”

New York-based private equity firm Harvest Partners formed Natural Products Group as a holding company for its acquisitions of Arbonne International and Nature’s Gate in 2004. Harvest Partners, along with other investors, paid $93 million for the acquisitions and initially was rewarded with rapid revenue increases until growth began to recede in 2007 due to attrition in Arbonne’s direct-sales force and the souring economic conditions.

For the year ending Nov. 30, 2009, Arbonne registered revenue of $378 million, and positive earnings before interest, taxes, depreciation and amortization of $38 million. Nature’s Gate registered $73 million in annual revenue and an EBITDA loss of $6 million. Together, they employ nearly 870 people.

Natural Products Group stated that Arbonne International and Nature’s Gate would continue with normal operations during the bankruptcy. The company said it has sufficient cash on hand to meet ongoing business responsibilities, such as paying staff, compensating direct-sales consultants and marketing products. To help support working capital needs, its lenders have agreed to provide the company with a $20 million credit facility, the firm noted.

Nature’s Gate, which is the brand name used by Chatsworth, Calif.-based Levlad LLC, was founded in 1972, and was a pioneer of the natural personal products sector starting with Rainwater Shampoo concocted in the herb shop of founders Leo and Vladimir Weinstein. Arbonne International, which is based in Irvine, Calif., and known for its Swiss-formulated herbal and botanical skin care products, was founded in Switzerland in 1975 by Petter Mørck and established in the U.S. in 1980.

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