Juul to File for Bankruptcy Due to Vaping Regulations
The electronic cigarette giant Juul is reportedly preparing to file for bankruptcy due to the impact of severe regulatory measures.
Juul, a leading US electronic cigarette manufacturer, could file for bankruptcy as it struggles with the effects of strict regulation. While the company has been expanding its overseas markets in recent years, the majority of its revenue still comes from the US market. However, since the FDA ordered the removal of all Juul products from the US market in June, the company has struggled financially. Sources claim that if the ban cannot be lifted entirely, Juul is expected to discuss financing issues with its lenders this week and enter a potential process of bankruptcy protection.
It has been reported that Juul, a major American electronic cigarette manufacturer, is preparing to file for bankruptcy due to the effects of strict regulation. As early as the end of June this year, the Food and Drug Administration (FDA) in the United States issued a ban, which stipulated that all Juul products be removed from the US market. Although Juul has been expanding its overseas markets in recent years, the majority of its revenue still comes from the US market, and with the domestic ban, it is likely that Juul’s financial chain will be broken, leading to bankruptcy.
Even though Juul appealed the FDA decision and could continue to sell its products normally throughout the litigation process, the situation at present is still “difficult to escape.”
On October 5th, according to informed sources, if the ban cannot be lifted entirely, Juul is expected to discuss financing issues with its lenders this week. This will lead Juul to start the potential process of applying for bankruptcy protection.
The informed sources also said that Juul has already received inquiries from its lenders and will soon request a financing plan from its debt holders that would enable the company to continue to operate its business by paying its normal expenses during its bankruptcy protection period.
However, a spokesperson for Juul said that the plan may change because the preparation work has not been completed, and the company is still considering other options. “We will continue to prepare for reorganization and other strategic options because we are uncertain which path is best for the company.”
As a matter of fact, soon after the FDA banned Juul products from the market in June, Juul immediately hired bankruptcy consultants, Kirkland & Ellis, and Alvarez & Marsal. It is reported that since then, the company has been considering filing for bankruptcy protection while seeking various financing plans.
Juul is a leader in the American electronic cigarette market and belongs to the American Altria Group, which is also the owner of the internationally renowned cigarette brand, Marlboro. Regarding Juul’s current development situation, Altria said, “As cash reserves continue to dry up, the possibility of Juul seeking bankruptcy protection has become higher.”