How a Bankrupt Houseware Retailer Secured Its Future with a New Deal

According to The Street, Multi-level marketing (MLM) companies generate sales through a network of sales representatives who aim to recruit additional representatives to boost sales. This direct sales model accounts for a small portion of the U.S. retail market, with person-to-person sales generating about 1% of total retail sales, translating to approximately $40.5 billion in direct sales in 2022, according to the U.S. Direct Selling Association.

Major Players in the Industry

Several well-known MLM companies have become household names in America, including Amway, Herbalife, Mary Kay, and Tupperware.

Amway: The Industry Leader

Amway, the largest MLM company, was founded in 1959 and is based in Ada, Michigan. A family-owned subsidiary of Alticor, Amway sells a variety of products, including cleaning supplies, beauty products, energy drinks, multivitamins, and air treatment systems.

Herbalife: Controversies and Regulatory Issues

Founded in 1980 and headquartered in Los Angeles, Herbalife produces and sells nutritional products. Over the years, the company has faced multiple fines for various violations, including a $67 million settlement with the Securities and Exchange Commission (SEC) for violations of the Foreign Corrupt Practices Act. In 2020, it paid a $55 million criminal fine to the U.S. Justice Department. These fines were connected to Herbalife’s China subsidiaries allegedly providing meals, gifts, and other benefits to Chinese officials in exchange for sales licenses and favorable treatment.

Mary Kay Cosmetics: A Legacy Brand

Mary Kay Cosmetics, established in 1963 by Mary Kay Ash in Addison, Texas, has grown to become one of the largest skincare and color cosmetics companies globally. The current CEO, Ryan Rogers, is the grandson of the founder and took over the leadership in 2023.

Tupperware: A Pioneering Company Facing Challenges

Tupperware, known for its iconic airtight food storage containers, was founded in 1946 by chemist Earl S. Tupper in Massachusetts. The company revolutionized marketing by selling its products through home parties, led by sales representatives, and established Tupperware Parties Inc. under the guidance of Brownie Wise. Tupperware was sold to Rexall Drugs Corp. in the 1950s.

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Tupperware’s Bankruptcy Proceedings

On September 17, Tupperware Brands and nine affiliates filed for Chapter 11 protection, aiming to sell their assets and avoid an out-of-court foreclosure on the company’s assets, including the Tupperware brand. The company faced approximately $811 million in funded debt obligations and declining sales.

Despite attempts to find buyers since April 2023, Tupperware’s efforts yielded no acceptable offers. In July 2024, the company tried again to sell but was unsuccessful.

Sale Agreement with Lenders

Tupperware has now reached a sale agreement with its lenders. A sale hearing was scheduled for October 29, where the company seeks to sell its assets to an ad hoc group of lenders for approximately $23.7 million in cash, a credit bid of $63.8 million in prepetition revolving and term loan debt, and the assumption of $22.3 million in revolving debt as part of a new first-lien credit agreement.

On October 23, Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware approved the debtor’s bidding procedures, canceled a bankruptcy auction, and set a sale hearing for October 29 to finalize the sale. Objections to the sale were due by October 28. If approved, the transaction is scheduled to close on October 31.