The share price of Revlon (NYSE:REV) dropped by 15% after a judge ruled against allowing the cosmetics manufacturer’s common shareholders to join an equity committee as part of the company’s bankruptcy proceedings.
According to a decision made at a Zoom session viewed by Seeking Alpha, Judge David S. Jones ruled against forming a committee for common REV investors. This decision was made during the hearing.
After arguing over the weekend that there is no need for an official equity holders committee in its Chapter 11 reorganization, REV shares swung wildly, dropping as much as 34% at one point on Monday before closing down 3%. Revlon argued that there is no need for an official equity holders committee. Revlon observed that despite not having an official shareholder committee during its bankruptcy, Hertz Global Holdings paid almost $1 billion in equity value to its creditors.
Revlon (REV) shares are currently trading at $6.80 a share, which is still three times higher than where the stock stood in the middle of June when the bankruptcy reports were initially made public.
Jones said, “Let me stress that the court has no opinion and makes no prognostication regarding the ultimate outcome or amount of value that it will be able to realize in this matter.” “Although the court has reached a judgment today, it has not concluded that equity holders would lose money. In fact, the court would be overjoyed if continued work and future developments give additional reasons to assume that equity investors may emerge in the money. However, as of right now, the movements have not carried their weight of proving a substantial chance of such a pleasant ending.”
Tom Lauria, a lawyer with White & Lawsuit, is representing the common equity holders of Revlon (REV). Lauria is the attorney who successfully represented Hertz (HTZ) in the bankruptcy case brought against the car rental networks. Since retail investors appear to believe there is still value in Revlon shares after the company filed for bankruptcy on June 15, Revlon share prices have increased by more than 300% since that date.
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