Revlon ( NYSE: REV ) once again made an outsized move to the upside, continuing its trend of significant volatility post-bankruptcy filing.
The impetus for the outsized move on Monday was a ruling in bankruptcy court that allowed the beleaguered retailer to proceed with a $1.4B loan over the objections of creditors. In short, the court ruled that Revlon must be allowed to borrow cash to continue operations it is entitled to under Chapter 11 protections.
The move echoes the court’s approval of a $375M loan in the early stages of insolvency for the cosmetics company, giving the retailer significant breathing room to pay existing debts and maintain operations that have been hit by significant supply chain problems, according to the company. The lender coalition, known as the BrandCo Lenders, is said to include major private equity firms Ares Ares Management and Oak Hill Advisors.
According to Reuters , a lawsuit may be brought against the lending coalition by junior creditors that have already raised objections to the loans. The creditors called the bankruptcy process a “mess” and argued that the private equity lenders already “fleeced” Revlon ( REV ) during the COVID pandemic, arguably pushing the company toward its current predicament.
Shares of the insolvent cosmetics retailer soared over 30% higher at its intraday high, touching levels unseen since the stock’s late-June short squeeze . As noted in last week’s Catalyst Watch , short interest on the name climbed to near 90% on Friday. As such, another squeeze higher could be in the making on Monday.
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Heavily-shorted Revlon rips higher after $1.4B loan approval