Pat McGrath Labs Suspends Sale Amid Financial Struggles in Chapter 11 Bankruptcy Filing

American beauty brand Pat McGrath Labs has officially filed for Chapter 11 bankruptcy, confirming months of speculation regarding the brand’s financial troubles. The company was initially slated to be auctioned off on January 7th, as reported by Marie Claire, but this sale was put on hold when Pat McGrath Labs filed for Chapter 11 protection on January 22nd.

Chapter 11 bankruptcy in the US allows businesses like Pat McGrath Labs to continue operating while restructuring their debts under court supervision. Financial planning and analysis manager Samuel Aboagye explained to Marie Claire that “they’ll continue running the business normally, but they have certain goals they must meet to pay back their debtors. If they don’t pay their debts (and by extension, their debtors) back in the timeline agreed upon, then they’ll cease control of the company or liquidate it for the funds and shut it down.”

Pat McGrath Labs appeared to be thriving on the surface until recently. The brand maintained high visibility online through viral launches and glossy social media campaigns. However, behind the scenes, employees reportedly described a more pressured environment.

This bankruptcy filing occurred during the same year Pat McGrath herself reached a significant career milestone. In March 2025, she was named creative director of La Beauté Louis Vuitton, the luxury house’s anticipated makeup line—underscoring her influence in both fashion and beauty circles.

McGrath’s rise began in the 1980s when her experimental, high-impact techniques set her apart from others. In 2015, she launched Pat McGrath Labs with a $40 pressed gold pigment, which soon became synonymous with maximalist glamour, particularly through its iconic Mothership eyeshadow palettes and richly pigmented lipsticks that dominated runways and red carpets.

In 2018, the brand secured $60 million in funding from Eurazeo Brands. Within five years, Pat McGrath Labs reached a $1 billion valuation. However, this success was followed by a more turbulent chapter for the once-unstoppable beauty company, as Eurazeo quietly exited its stake shortly after this milestone.