GDA Luma Capital Management has secured court approval to inject up to $30m into Pat McGrath Labs as part of a Chapter 11 recapitalization that will hand the private equity firm a controlling stake in the beauty brand.

The financing package includes up to $10m in debtor-in-possession funding, alongside a commitment of at least $20m in post-emergence working capital. The structure positions GDA Luma as senior secured creditor during the restructuring process, while setting the stage for full control upon exit.

The transaction marks a classic distressed-for-control strategy. By underwriting liquidity during insolvency proceedings, GDA Luma is converting balance sheet stress into ownership upside. Upon emergence, the firm will hold a controlling equity interest, with founder Dame Pat McGrath retaining a significant stake and continuing as Chief Creative Officer.

The agreement includes measures to support critical vendors and maintain operational continuity throughout the Chapter 11 process. Paladin Management Group has been appointed Chief Restructuring Officer to oversee the restructuring, with the full recapitalisation expected to complete in the coming weeks.

For private equity, the deal shows how brand equity alone does not guarantee capital structure resilience. Yet for distressed investors with operational expertise, iconic consumer assets remain fertile ground. 

The recapitalisation also signals renewed product momentum, with a pipeline of launches scheduled from Q1 2026. If executed effectively, the combination of fresh capital, tighter governance, and founder continuity could reposition the business for sustainable growth.

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