Forma Brands, the beauty incubator behind Morphe, Jaclyn Cosmetics and Ariana Grande’s R.E.M. Beauty, has filed for Chapter 11 bankruptcy protection in Delaware, one week after announcing Morphe had closed its US stores.

In a court filing, the company said its assets would be acquired by a group of lenders: Jefferies Finance LLC, Cerberus Capital Management LP and FB Intermediate Holdings LLC. Forma also secured about $33 million from creditors to continue operating.

In an October report by Reorg Research, later confirmed by BoF, Forma was said to be exploring emergency financing options, including a potential Chapter 11 filing. At the time, Reorg Research estimated the company had $600 million to $700 million in debt.

Forma Brands is also about to lose one of its highest-profile beauty lines, R.E.M. Beauty.

Simon Cowell, president of Forma Brands, informed employees Thursday that Forma and R.E.M. Beauty would also be parting ways, according to an internal email obtained by BoF.

“We have been in discussions with the R.E.M. Beauty team for some time about our future working relationship and the next chapter for the brand. We have come to the mutual decision that the brand will be best served under the ownership and operational management of the R.E.M. Beauty team,” Cowell’s e-mail read.

Cowell said Forma intends to complete the transition within 45 days. During this time, the company will continue to sell R.E.M.’s remaining inventory online and ship to retail partners, which include Ulta Beauty.

In early 2021, the company negotiated the license to release makeup and skin care products for Grande, fast tracking a collection of space-themed makeup into production. In November 2021, R.E.M. Beauty launched “Chapter 1: Ultraviolet” and has introduced three more chapters since.

The Grande-fronted line was seen as a top priority within the company, with resources diverted from other brands to support R.E.M.’s marketing and distribution efforts, according to several former Forma executives who spoke with BoF. However, the line’s sales failed to match expectations.

Cowell’s e-mail said that Forma will “prioritize our brands and channels that are the most meaningful to consumers, including Morphe and Morphe 2.”

Experts said declaring bankruptcy could be a “lifeline” for the struggling beauty company once valued at over $2 billion. Following a majority investment from private equity firm General Atlantic in 2019, Morphe relaunched as incubator Forma Brands a year later.

According to internal documents reviewed by BoF, Forma Brands had budgeted for over $420 million in revenues in 2021, but was on track to come in about $80 million short of that figure. Morphe recorded sales of just $295 million in 2021, down from about $500 million in 2019, according to media reports.

The newly formed Forma Brands soon faced a string of setbacks, including a cosmetics slump; a pandemic that de-prioritised makeup and a Gen Z consumer with different beauty tastes and habits than Morphe’s millennial customers. Around the same time, Morphe distanced itself from longtime influencer collaborators Jeffree Star and James Charles, both embroiled in public feuds and controversies.

Plans to build other brands to stand alongside Morphe faltered. In 2020, Forma acquired Playa, a hair care line, and Lipstick Queen, a lipstick line, and introduced its own skin care and supplement lines. All were met with a tepid reception and disappointing sales.

In August 2020, the company launched secondary Morphe line, Morphe 2, fronted by Charli and Dixie D’Amelio and targeted towards Gen Z. A skin care line with Charli D’Amelio and a beauty brand with Demi Lovato were both in development but never came to be. General Atlantic declined to comment.

In December 2022, BoF reported that Playa’s founder Shelby Wild sued Morphe and General Atlantic in New York State court, alleging the companies failed to adequately support her line after its 2020 acquisition. In court documents, Wild alleged that General Atlantic discussed plans to turn tiny but fast growing Playa into a $50 million business within five years. According to internal documents reviewed by BoF, Forma projected $2 million in sales for Playa in 2022, barely more than the year prior, and said it would “hold new product development on Playa.” Sephora confirmed it dropped Playa in 2022.

“Over the last year, Forma Brands has been implementing initiatives to stabilize our business and reposition our organization for long-term growth,” Simon Cowell, president of Forma Brands said in a statement Thursday.