Home Companies Arbonne Arbonne In Chapter 11 Bankruptcy: It’s Official

Arbonne In Chapter 11 Bankruptcy: It’s Official

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Arbonne has officially filed for Chapter 11 Bankruptcy protection in Delaware.  Here is the court information:

Natural Products Group LLC, U.S. Bankruptcy Court, District of Delaware, No. 10-10239

The company was more than $800 million in dept while Arbonne distributors were telling their prospects that the company was debt free.

From Reuters:

The company plans to borrow up to $20 million to fund operations during its bankruptcy, known as a debtor-in-possession loan.

Lenders owed approximately $530 million will end up owning 85 percent of the reorganized company’s equity under the restructuring plan. They will also have a new term loan worth $125 million.

Lenders owed about $216 million under a separate loan will be allocated warrants that will allow them to purchase up to 5 percent of the equity in the reorganized company.

Harvest Partners LP, a New York private equity firm, owns the prebankruptcy equity in Natural Products Group and it will be wiped out.

Harvest formed Natural Products Group in 2004 to buy Arbonne International LLC, a direct marketer of personal care products, and Levlad Inc, which owns the Nature’s Gate line.

Harvest, with other investors, provided $93 million of equity for the acquisitions.

Natural Products Group, based in Irvine, California, said in court documents that it grew rapidly in 2005 and 2006 as Arbonne added a large number of direct marketing contractors, providing an unsustainable boost to revenue.

The company’s net sales began to fall in 2007-2009 due to a loss of direct marketers and downturn in the economy.

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"Ty Tribble is an Internet entrepreneur, author and Work At Home Dad who lives in Seattle, Washington with his wife, Richelle and two children, Emma and Tyler. Ty has been featured in Entrepreneur and Success From Home magazine and is considered by many as the # 1 blogger in the world on the subject of Network Marketing. Author of the book, ‘Double Your Income with Network Marketing’, Ty teaches lead generation strategies through social media and blogging to tens of thousands of Network Marketers around the world."

53 COMMENTS

  1. Here is the rest of the story…. The debt will be cut by 80% in 60 days! Arbonne is NOT closing the doors, and it will emerge from this restructuring stronger than ever. The real test of character is how one operates under adverse conditions. Arbonne consultants are smart and resilient, and they will see the bigger picture. This is a small bump in the road for a 30-year old LEGACY company!

    Here is the start of the Reuters article:

    * Expects to emerge from bankruptcy in 60 days or less

    * Assets of $286 million, liabilities of $804 million (Adds details about new ownership, company history)

    By Tom Hals

    WILMINGTON, Del., Jan 27 (Reuters) – Natural Products Group, owner of the Nature’s Gate line of organic shampoos and soap, filed for bankruptcy protection on Wednesday with the support of its lenders and expects to exit Chapter 11 in two months.

    Lenders holding 90 percent of the bank loans voted in favor of the restructuring, which will cut the company’s outstanding debt by 80 percent, the company said in a statement.

    • …and Arbonne will be 85% owned by lenders. Not sure I would want to put my blood, sweat and tears into a company that was that mismanaged to the tune of being $530 million in dept, files bankruptcy and if they come out of it, they will be owned by the banks.

      I’m sure that the full press “this is great for us” is on but I can’t see filing bankruptcy being a good thing for an associate who is trying to get someone interested in a business opportunity. Will the distributors have to disclose this to their prospects?

  2. Someone please explain WHERE the debt goes?? If I am a bank and I now own a company that has $286 million in assests and $804 million in liabilites, how is that a good thing for me or anyone else? Would I not want to cut commissions to recoup some of the debt? Reading the info on the website it sounds good, but…….trust me I want to have faith it will all work out.

  3. Yes Ty, Arbonne announced they would have to notify everyone that has been with the company for the last two years. This includes the preferred clients as well. The court requires this notification to be done by physical mail but Arbonne is pressing the court to let them do it by email. They say it is very expensive to send a notice by mail but I think they want to do it by email so it reaches less people. As we know people tend to change email addresses often but a physical address can be forwarded up to a year.

    Talk about a rah rah moment, I listened in on the VP call today and it was ridiculous! Kay actually said she had a lot of fun working on the BK and at the beginning of the call she told everyone she had “good news”. Rita said there has never been a company to flourish (meaning MLM) after a BK until now. Arbonne was going to rewrite the books on how to do this right. What the heck? I was absolutely speechless as I listened to this whole thing. I think Kay’s years of working at Mc Donald’s has let too many happy meals go to her head! They gave the VP’s NO warning that they were going to post information about the BK on arbonne.com, they simply did it and now the VP’s look bad for not telling their teams first before it went public. In my last post I said the consultants were not telling their teams about the financial problems, it sure has come back to haunt them now!

    They also started their own blog on the company’s site and they begged people to post comments constantly so as to raise the number of hits. They said it would beat out the negative competitors blogs and when people google “Arbonne bankruptcy” they would get the Arbonne corporate blog first. So the little worker bees have been busily posting, some two times for a grand total of 340 posts in a day. Maybe we need to tell people to post more on this site to balance it out!

    I feel sorry for my friends drinking this kool aid, some of them are so sucked in. Once you have a chance to really study other companies you find out quickly how bad Arbonne’s compensation really is. One poor girl on Arbonne’s corporate blog stated she was about to get her “free” Mercedes and who wanted to join her? Well missy I am here to tell you that YOU will be the one to put that car in YOUR name and that’s not free!

  4. It’s obvious the posts here do not understand business and economics. A pre-packaged Chapter 11 is a RESTRUCTURING to eliminate debt. This particular restructuring has the debtors becoming the new owners. Don’t you think if you became an owner in a company that owed you money you would be dedicated to its success. Also, to agree to this option, you must have belief in the company! The naysayers out there need to find something to do.

    • Let me ask you this…

      What does a “pre-packaged chapter 11 bankruptcy” mean to the prospect that is sitting across from you at the coffee shop?

      Do you tell them about it and risk them not wanting to get involved or do you leave it out and hope that they don’t find the news on the internet?

      Two major concerns you need to be thinking about…

      1. Is a company that had over $800 million in debt and earning $39 million a year before taxes viable? Why did they gain so much debt while consultants were running around saying they were debt free?

      2. How will this bankruptcy impact your personal business? There was already “massive bleeding” from 2007 to 2009 in terms of net consultants (I think the company lost between 120,000 and 250,000 consultants a year). Net would be take how many new consultants who came in and subtract the number who left.

      I would be asking myself two things.

      1. How does your business look today?

      2. How will my business look in a year after this bankruptcy mess? (Not whether Arbonne comes through OK, but whether I can personally overcome the bankruptcy stuff with my team and prospects.)

  5. Hey informed,

    Arbonne likes people like you. Don’t think, just do the stuff that we tell you to say. Stop drinking your koolaid and go on a detox. While you are at it take a math course so you can understand numbers.

  6. A judge today looked at the numbers and look at what he said… Arbonne is ROBUST and VIABLE. This will be a QUICKIE and Arbonne will come back stronger than ever. Sorry, naysayers! Move on to easier targets! Arbonne reps are smarter than to fall prey to your hype and drama..

    –Natural Products Group LLC won court permission Thursday to pay the consultants who sell its personal-care products and take other steps necessary to protect what the judge overseeing its bankruptcy called “the robust viability of the business.”

    “I read this as a financial restructuring. The business itself appears to be well managed,” Judge Brendan Shannon said at the debut hearing in Natural Products Group’s Chapter 11 case.

    He authorized Natural Products to move quickly to maintain the network of consultants who sell its skin-care products and other products, so the business doesn’t suffer during what is planned as a fast pass through bankruptcy.

    • Wow, reality check. Re-read what you just typed and let that sink in a little…

      –Natural Products Group LLC won court permission Thursday to pay the consultants who sell its personal-care products and take other steps necessary to protect what the judge overseeing its bankruptcy called “the robust viability of the business.”

      And you feel like this is all great.

  7. Of course the judge has to approve all financial transactions for the next 45-60 days. That is the deal in a Chapter 11. No drama there either. The judge would have said ‘no way’ if the company was not proven to be managed well, and was viable and ROBUST (in his words).

    Why doesn’t everyone post their own MLM companies, and be transparent, so that we can pick them apart while we are at it? Vultures, go home.

    And, please people, don’t use vernacular like ‘drink the kool-aid” … it looks foolish and immature. Coke execs don’t tell Pepsi execs that they are “drinking the kool-aid”.

    What happened to professional integrity? I don’t see it on this blog. Why don’t you start a positive blog for all of the great MLM companies and their loyal distributors? I’ll support yours if you support mine!

  8. Reality check!

    Just because a judge says it is OK doesn’t mean everything is fine. Over half a billion in the hole in 60 days. Are they going to do some off shore drilling for oil to pay that off?

    500 million is not a little bit of a problem. It is a big problem. Even if sales for the year were only 200 million. AFter you pay for all the consultants, pay for all the corporate employees and the warehouse employees, how much profit is left. Not much

    Reality check I think it is time you take mathematics again.

  9. Perhaps, you should review your own instead of coming here and talking about integrity. Unless you are Kay herself, you don’t know what the heck is going on.

    The general public now knows what Chapter 11 is and hearing that will cause a slow down. Car sales went down when GM was going through it and their stock was no more. This is skincare and it is safe to say the majority here are women in this business. Maybe you should get off this board and work your business because you have a debt to pay off.

  10. I was an NVP with Arbonne and resigned this past year. I have to say the writing has been on the wall. They told us as NVP’s that this was a possibility in the fall. I left because I felt like it lacked COMPLETE integrity to recruit someone into this company that has no momentum and is going bankrupt! I I walked away from a six figure income. I personally know several VP’s that stay and have no faith in the company because they need the income which I did as well….but not enough to sell my integrity. I have since realized that Arbonne’s compensation plan is fundamentally flawed. They were a great company for years but I believe those days may be over. I LOVE the product and wish the best for the company but at the very heart of the matter you must not open your mind to the company hype and look at the facts and ask yourself is this a viable way to make an income and will you be compromising your core values. Myself and others within this organization have said that many of those within act as though they are in a cult and will not look at the facts. YOU owe your family to look at the facts.

  11. Well, well, well, reality check. The Arbonne arrogance permeates the very air you breathe. You think you can come on this blog and intimidate those of us who have something relevant to say which happens to be contrary from the Arbonne hype.

    Go back to the Arbonne blog and repeat “Arbonne Rocks” 400 times. I’m sure that will make everything ok for everyone.

    This is the truth blog. Having trouble swallowing?

    Thank you Ty for a voice here. We will continue to search out facts from fiction on this site.

    By the way, you’re a bully. 🙂

  12. This is an unfortunate situation. The way private equity works is to put some money in a deal but borrow the most of it against the target company’s future revenues. When the economy goes into recession companies with so much leverage often have a difficult time servicing their debt.

    Rest of the story and reality check both have a job to do which if try and control the public relations damage this situation is causing. If Arbonne loses its distribution network (which is after all voluntary) the chances of the company ever paying off its new owners is remote.

    Still my opinion is you get more bears with honey than vinegar and a less aggresive approach would be more effective.

  13. This is a very challenging time for Arbonne and especially its field leaders. It is certainly no fun to go through a chapter 11. They will want to tell prospects the truth and that will not be fun thing to do regardless of the home office spin on it. And my personal recommendation is to lose the spin. Tell the truth and cowboy up or in this case cowgirl up.

    This does not have to be the end of Arbonne by any means. It can be a new and quantum leap beginning. And before you think I drink “Arbonne Light” or whatever their health drink is…. I don’t . I am a competitor. And I am a historian of sorts. And Arbonne has history on its side.

    For one chapter 11 is common and has nothing to do with going out of business but everything to do with a fresh start. Debtors trade debt for ownership. Previous ownership is often canceled as is the case with Harvest Partners. As of today, Arbonne is in vastly better shape than last week or last month. That is a weird thing to celebrate but it is true.

    I didn’t research the following so forgive the vague generalities. I am close enough.

    In the mid 1970’s the FTC sued Amway for being an illegal pyramid. It took years and tens of millions in legal fees for Amway to prevail. How do you think those field leaders felt for the years they were under indictment? Years of “you’re illegal headlines ”. How easy was it to quit? Instant easy. But some didn’t. Some for whatever their motivation stayed the course and built thru it. At the time Amway was less than a billion a year in sales. Today they are over 8 billion.

    In the late 70’s the FDA sued Herbalife for illegal claims. Mark Hughes the owner was called to testify before the US senate. He, on national TV belligerently defied the FDA. The whole world knew Herbablife was done. Mark didn’t. His leaders didn’t. At the time Herbalife was doing about 100 million a year. Today 2 Billion. And that after Mark Hughes the evangelical health nut owner of Herbalife died of alcohol and drug abuse. We all knew they were done then. That was 3-4 CEOs ; 3-4 ownership groups and 1 billion in sales ago. Yes, Herbalife has almost doubled in size since his death.

    Similar challenges have faced many companies. Most get blown up immediately. The ones that reinvent and grow through it are the ones with a “ Rock like Commitment” to the long term Vision and to the groups they have help establish thus far. Arbonne has such a group of leaders. Besides a 25 year track record product; its leadership is its greatest asset…far beyond anything on its books.
    And what is possible if not probable is that a real visionary with a few hundred million will buy the company and make it his or her Vision of Legacy and build it to 2-10 billion and beyond.

  14. Richard…dude….The company lost !/2 Billion dollars in annual sales..(2009 compared to 2006). Nobody stepped in to sue them and stop sales…No lawsuits, no federal subpoenas, no false claim accusation….Now they might get one if they keep it up with the Arbonne Happy Meal campaign…They’re asking for trouble from a trademark infringement……… What leadership? They can’t find any leadership or they can’t seem to keep what they get. They all have left !! US, Canada, Hispanic Div…They left with dirty hands. Where’s the hands on experience with Network Marketing…What do french fries and happy meals have to do with a high end cosmetics, consultant driven direct sales company??

    Recession…everybody keeps talking about how the recession caused all of this….I must have missed it in the news…Maybelline, Nu-Skin, Avon, Mary Kay, Roden & Fields….they all filed bankruptcy, right? Oh, they didn’t…Well, how many skin care companies filed?? One..
    Oh..guess that recession argument just went out the window…

    Reading these posts you’d think some people were a little ticked off….ya think? Deception, Deception, Deception…
    The bridges that mgmt burnt were their own…But folks are going to batten down the hatches, board up the windows and despite all the warnings, will ride out the pending hurricane of public and consultant backlash…Some may survive…most won’t….And, those that survive will take another 20 years to try and rebuild their reputation…..if they can…Good thing that wrinkle cream is so good…

  15. I have to applaud you Truth! Each I read your posts, I hear facts, common sense, intelligence and yes, truth! I can testify that your information is exactly what I know to be true and experienced much of myself. Your posts are straight forward and you know what you are talking about. You are so right on.

    YOU ROCK!

  16. One of the interesting things about a Chapter 11 Bankruptcy filing of a privately held company is that it is forced to release financial information that might not otherwise come to light. If you review the company court filings, you will find some interesting data.

    One interesting point is the summary of why the filing was necessary:

    “Although the Company had experienced a high rate of revenue growth through 2006 and
    early 2007, this was driven primarily by unusually higher levels of recruitment of new AICs,
    which was unsustainable. In 2005 and 2006, on a net basis, the Company added approximately
    434,000 and 612,000 AICs, respectively. Because recruitment of AICs tends to be a leading
    indicator of later attrition, the historically high numbers of new consultants in those years
    resulted in attrition exceeding the recruiting levels in subsequent years. In 2007, 2008 and 2009,
    on a net basis, the Company lost approximately 108,000, 270,000 and 145,000 AICs,
    respectively. This attrition, combined with the downturn in the economy and the financial crisis
    later in 2008, caused a reduction in the Company’s overall net sales.” [Proposal to Restructure, p. 31]

    Go back and check that against the company’s official statements at the time about the number of independent consultants and sales growth. Has the company been accurately reporting that it was losing consultants and had declining sales in 2007 and 2008 ?

    Exactly how successful was the company during that period? Check the financial statements [Schedule 5]:

    2007 Sales: $722,494,000
    2008 Sales: $569,157,000
    2009 Sales: $370,993,000

    How did that translate into profit or loss ?

    “For the year ended December 31, 2007, Natural Products Group reported a $3
    million net loss on a consolidated basis.

    For the year ended December 31, 2008, Natural Products Group reported a $48
    million net loss on a consolidated basis.

    For the eleven months ended November 30, 2009, Natural Products Group
    reported a $40 million net loss on a consolidated basis.”

    Does that seem consistent with how company executives have portrayed the company during that period ?

  17. We have been told that the UK & Australia operations are not effected by this Chapter 11. I am very confused. I know for a fact that our VP’s new this was coming around November last year, yet failed to inform their downline until the “official” outing of it all. Not the way I would conduct business. I do understand that as consultants they need us to carry on like nothing has happened. I am just questioning ethics now.

    I came across this statement that I think as consultants we all need to consider when recruiting.I do not know who wrote it and it came from a blog site.

    “By withholding this information (Chapter 11) you prevent the potential business builder from knowing all the risks. Now there is nothing wrong with risk. All businesses carry some risk. But risk, in order to be ethical, must be known by the person taking the risk. Even if I think it is worth the risk, this does not justify the ethic when someone else is making the decision for themselves and their family. The only way to justify the ethic is to give the full information to the person making the decision.” author unknown.

    Somehow I feel that building a team is going to be hard if you follow this. Put yourself in the prospects shoes..the opportunity wouldn’t sound too exciting no matter how you sugar coat it!

  18. REad this below. Look about what one consultant posted on the WAHM.com site. She truly believes what was given to her in this email. They are convinced that in 7 weeks ARbonne will be debt free. I’m baffled at this. ANy experts here who can explain how this bankruptcy is debt free.

    I got this from my NVP today. One more step in the right direction!

    Hey Guys!

    I encourage you to go to :: Arbonne International ::, and click on the interview/Q & A’s with CEO Kay Napier. We are so excited about the financial restructuring! The case Judge basically agreed to everything we requested, and has supported us 100%! We believe this whole process will be over by NTC—about 7 weeks away. We are so grateful of CEO Kay Napier’s leadership in once again putting Arbonne debt-free! This is going to be an awesome year of growth in this company! If you have been holding back, this is the perfect timing to get involved again, before our third big momentum! If you have any questions, please give me a call!

    Donna

    — On Fri, 1/29/10, Arbonne VP Support wrote:

    Dear Donna McPheeters (15154547),
    We are glad to tell you that just two days into our restructuring, we have already made significant and positive progress!

    To view the most recent developments, please log on to arbonne.com > Internet Consultants > Arbonne Restructuring > First Day Motions Update from CEO Kay Napier.

    Thank you for your continued confidence and support.

    Sincerely,

    VP Support

  19. > “We are so grateful of CEO Kay Napier’s leadership
    > in once again putting Arbonne debt-free!”

    This borders on comical. The published court documents make it clear that the company will carry $135-145 million in debt, and that assumes that the plan is fully approved as-is. It must be so much easier to sell stuff when you can find people to just lie for you. Read the actual numbers in the court documents filed by Arbonne. Compare them to the BS that the company’s shills have been putting out for years. Ask yourself whether you should trust these folks with respect to anything at all.

  20. My understanding is that Harvest Partners over leveraged Arbonne and then defaulted on their loan. The banks (and I heard there were many involved) were left with two options:
    1. dissolve the company and absorb the debt or
    2. trade debt for equity…banks aren’t in the business of owning (or managing) skin care companies, they are in the business of lending money.
    So the big question is WHO actually owns Arbonne now. Tim Coleman of the Blackstone Group refers to investors who “bought Arbonne’s debt at a discounted price in the hopes of owning the company.”
    Arbonne has hired The Blackstone Group as their financial advisors. They are Financial studs. I’m impressed with Kay Napier — finally, no hype. Seems like Arbonne finally has the right people in place and that they have learned some valuable lessons — i.e. hype is cheap and attracts cheap people.
    By the way, In ANY industry or profession you have to be a worker bee for awhile. You need to earn your stripes. I don’t have any problem with working hard with the prospect of learning the business and then duplicating myself by teaching and training others what I have learned. With that said, I refuse to prostitute myself. The economic downturn certainly had an impact on the drastic decline in sales, but in my opinion was a small part of the bigger picture…
    From the eyes of an area manager who started her business about 3 ½ years ago just when the decline began…this is how I interpret the collapse ….many of the leaders/VPs had no idea how to teach and train because they had never been a worker bee who earned their stripes – they rode the wave of hype and taught their team to do the same (NOT SUSTAINABLE). Unfortunately, greedy VPS bastardized the original compensation plan by teaching new consultants to sign up EVERYONE as a consultant. It was all volume based. I was told, “if you don’t sign them up, somebody else will.” Consultants gave away their 35% profit and signed everyone up for the discount. Uplines were earning more on the sales than the consultants who actually closed the sales were earning — THIS IS A PYRAMID. When consultants aren’t making money, attrition is out the roof and thus began the churning and burning. The hype gained momentum and it got ugly. Arbonne corporate did not intervene. So the bottom line is this… If consultants aren’t happy, they quit. When consultants quit, District Managers lose their title and quit. When Districts crumble, areas collapse, when areas collapse Regions collapse, when Regions, collapse Nations collapse…it all starts with the foundation…the consultant who needs to be adequately compensated…
    I saw a lot of ugliness…even one NVP admonishing their team for not building quickly enough. She even said, I’ll find a new team if you don’t shape up. I questioned whether my own up line was greedy and lacked integrity, or if they were just ignorant. I now honestly believe that they were just ignorant. Those who have built a sustainable business with Arbonne have earned their stripes. Those are the ones who will walk through this difficult time and emerge successful. Those who haven’t and built their business on hype are suffering or have left to find the next arena to “hype it up.” Those who thought they could come in and get rich quick, found out they couldn’t and now are bitter…
    Obviously it is in the best interest of the current owner of Arbonne (whoever they may be) to do everything they can to make Arbonne as profitable as possible. That starts with the foundation of the company…IN Feb. Arbonne launched the preferred client program… A new consultant is NOW able to earn 15-35% commission on their sales with the opportunity to grow a team and to earn overrides on top of that.
    The compensation plan is a very fair and balanced one. It is a hybrid between direct sales (where you can earn right now profit on your sales) and network marketing (where you can build residual income as you build your business through teaching and training others.)
    So I see Arbonne’s future as a bright one for those who stick with it, are willing to pay the price in sweat equity and who build with integrity. I am fortunate that my team trusts me and my clients trust me. I refuses to over promise and under deliver. I know that I am my Arbonne business. Good luck to all….

  21. Well it’s a shame to hear that these consultants don’t have a solid as a rock company. You can tell they definitely mis-managed funds because regardless of all the plush terms filing chapter 11 is never a good thing !!! Debt free companies are the only sure thing to get into and I don’t see that happening for this company ever . My thoughts are with the consultants that actually believe people should wanna become apart of this time bomb!!!

  22. OK — now I’m worried. My Jan. check from Arbonne was returned for insufficient funds.

    If the consultant is not paid – this is the ultimate deal breaker as the sales force is the foundation of the company. I was optimistic after listening to the videos and information on the Arbonne website about the restructuring, but don’t know if I can continue to align myself with a company that continues to over promise and under deliver.

    Arbonne’s words
    You can fully expect Arbonne to maintain normal business operations throughout the restructuring process, with no disruptions to our relationships with our Independent Consultants, customers, employees, or suppliers. Likewise, you and your fellow Independent Consultants can be confident that your compensation from commissions and overrides is secure.

    Yet they have hired Duran Duran to play at the National Training Conference. HMMMMM….

  23. AM that is so terrible.

    When did you deposit it? Would you share the general amount? Did you call the office?

    Ty this sounds like breaking news and when I Googled, no web pages or blogs discussing this issue came up. Since your blog is #1 in search right now for Arbonne making a new post about this would at least give some poor reps a place to connect.

    You know, I wonder. The check I think AM is talking about is the check for December (went out about 1/10? or so?). Does anyone know if these checks issued prior to the filing become part of the BK and make those payments to IC just part of the unsecured creditor pool?

    I know HP have been given approval to pay commissions AS OF THEIR BK FILING DATE, but does that automatically provide protection to payments issued before the filing? In the BK filing it said the company had $4.3m in liquid funds (money) yet goes on to say that consultant monthly commissions are $11.5m? Could they really have cut a bunch of bad checks and just like in a personal bankruptcy, the date of filing automatically protects them from whatever they did prior to that date?

    How terrible. This is just awful. Sickening.

  24. The company sought permission to pay the outstanding Consultant incentive amounts, but the devil is in the details. If you read the actual court order [available here: https://www.npginfo.com/CourtFilings.aspx – it is docket #35], you will see that the company is authorized to pay prior consultant claims but only up to $12.5M, that banks are directed to honor the checks but only if there is sufficient money in the accounts, and that the company is authorized to continue the consultant incentive plan but the court specifically notes that the order will “empower but do not direct them to effectuate the payments herein, said Debtors retaining the business judgment to make or not make said payments, and in all instances subject to the condition that funds are available to effect any payment.”

    In other words, Arbonne can choose to pay the consultants or not, but is not required to do so, and is specifically forbidden to do so if there isn’t enough money in the bank to make the payment. Note that the text of the order is prepared by the company’s lawyers, so this is exactly what Arbonne’s executives and lawyers requested.

    Note, however, that the plan appears to contemplate that such checks will eventually be honored. Assuming there is cash to do so.

  25. Mary Branch – your honesty is refreshing. I am not with Arbonne but I have friends that are and they have worked so hard for what they have (or had).

    I believe every company goes through ups and downs. I have been through some dark hours with my company too in the years I have been with them BUT they were honest through every trial. I believe it is because of their honesty and care that the company is strong.

    I am so sad for those folks that feel like the rug has been pulled out from underneath them. Once news of this nature hits the Internet and it isn’t delivered first from your company you inevitably suffer losses and THAT is not fair.

    I applaud your integrity. 🙂

  26. Hello all-
    I have been practicing law for 9 years (BK’s) and I have friends in Arbonne. I have been to their site and I have read everything. Arbonne is making the right move, leave it to the experts. They will be fine. Its the same people on this blog that drive their Chevy to Macy’s and use their Citibank card to buy their son a Chicago Cubs jersey then go work out after at Ballys fitness center. Hello…Chevy (GM), Macy’s, Citibank, Cubs, Ballys…all filed Chp. 11 Bankruptcy’s. But everybody seems to be OK with that..huh?? I don’t do the business, but I like the products, like I said, leave it to the BK experts…yes just like the ones that handled all those other companies…they are fine, its business.

    • Sounds great Chad, but Arbonne is nothing like GM, Macy’s Citibank or the Cubs. It’s a Network Marketing company that depends on reputation, loyalty and trust. Those elements are shaky to say the least right now.

  27. The only threat to Arbonne during this transition period is consultants from other companies. I wish that I could say that you are one of the few to try to use an already challenging situation against me but unfortunately I have received numerous emails and calls from people hoping to use this to better their own businesses. Are you expecting a positive response from people, desperate to find another company to start all over again in? Even if you are successful in breaking someone in an already difficult time I can guarantee they would not want to come on board with you or any other company. They would more than likely completely change their opinion of our industry as a whole and give up on their dreams that made them want to start a Network Marketing business in the first place. Their friends and family would also see their now negative attitude towards the industry and change how they view direct sales also.

    As “business owners” in the Direct Sales market we need to work together now more than ever to educate people about our industry and promote and nurture a positive image for Network Marketing. Do you really think that it is in your best interest to have a company that is not even in direct product competition with you close? Do you really think that having a 30 year old company in 4 international markets with thousands of consultants close down would be a positive for our industries’ image? No matter who’s company may be facing difficult decisions it is our duty as sisters and brothers in this industry to rally together and support each other.

  28. An actual bankruptcy lawyer (or anyone who reads the WSJ) would know that Citibank did not file Chapter 11; it received TARP funds from the government. The Cubs’ filing was also purely defensive; they were originally left out of the filing by the parent company, Tribune, but later separately filed in order to insulate the proposed sale of the club from claims brought by creditors of Tribune. But this is besides the point.

    Ty’s comment is on point: the relationship between Arbonne and its consultant network is different than the relationship between a retailer company and its retail customers. Retail customers buy product for immediate payment, and take the product home. You either received a decent product or you didn’t; you didn’t extend credit to the bankrupt entity (if anything, the entity might have extended credit to you). Arbonne “consultants” are actually distributors of Arbonne product. They are investing significant time and money on the hope that they will eventually receive profits through downstream customer purchases and – more typically – through downline commissions and overrides. Hence, consultants are dependent upon the continued “goodwill” of the company with respect to future retail customer purchases, and upon the company’s willingness to maintain (and pay) the future commission and overrides. Effectively, the consultants are extending credit to the company in the form of their continued work and sales in the hope of future payments.

    When a business files Chapter 11, it is completely normal for vendors and distributors to reevaluate their credit terms with the debtor company. Why would a rational business agree to extend credit to a company that has admitted that it cannot pay its debts when they come due, and is now going to stiff its creditors (in this case, to the tune of hundreds of millions of dollars)? If you are doing work for a debtor company, you want cash up front, or some kind of security, so you know you will paid.

    What security does an Arbonne consultant have with respect to future commission payments, or even whether there will be product next year to sell? None. This is what Ty means when he mentions reputation and trust. Consultants are going on trust and reputation when they agree to work to make Arbonne sales in the hope of future earnings. The current insolvency dramatically changes that situation.

  29. Kirsten……..A “transition period” , really? This is what is happening here?

    Arbonne has tarnished the world of Network Marketing, NOT all those other people you are so willing to shoot “blame bullets” at.

    Arbonne has treated their consultants shamefully, destroyed a nearly spotless reputation and is a financial train wreck. Arbonne did that. What, we are to hold hands all across the Networking world and say we are brothers and sisters? Why don’t I get this philosophy? I am still not over what Arbonne has done to Shelley. She was thrown aside like she was nothing, absolutely nothing. And that is only one of many such stories.

    What I see is sickening. There are those people who want loyalty to a company, TO A COMPANY, above and beyond family, other people and personal convictions. I, too, am saddened that this is reflecting poorly on Network Marketing but I will not support, condone or pretend that this is a “tranistion period” for Arbonne! I am thankful beyond words for those who are willing to stand up in the face of these injustices and call it what it is.

    By the way, you are right. It is not a good thing for Arbonne to fail. Yes, it is more ammunition for those who have an already negative view of NM. Arbonne has the responsibility to uphold the high standards that are expected of an NM company. Arbonne has the responsibility to be fair and honest. It is ARbonne that has sunk to low levels of performance on all accounts. I know there are many who are trying desperately to hold on to their teams because their financial survival hangs in the balance here. I don’t want to see them fail! But Arbonne is again responsible to make sure that doesn’t happen. Their decisions are destroying the very things that make a NM business successful.

    The “blame bullets” go to Arbonne! And I, for one, will not support a company who treats their consultants without any dignity whatsover.

  30. Chad comparing ARbonne to GM is a joke. There were so bad that they took money and they had a restructuring plan. Then Obama had to step in and get rid of Rick Wagner. Now the government runs and owns GM. The GM stock disappeared and that use to be a blue chip stock. The car industry is more important to the government then ARbonne. My hubby was in GM(high up in the levels) before this happened. He mentioned that GM would go down and no one believed him. The CEO and all the chair boards of GM were taking tons of money out and running it right down to the ground. Now the hubby heads operation for auto supplier and GM is one of his clients. He still sees how the restructuring will take over a decade to fix.

    ARbonne is totally different. MLM in skincare. GM was known as the top automaker. You can’t compare them. ARbonne was mismanaged and that is it. There are many new things that have to be in place before there will be any recovery. The numbers are low for NTC and they lowered the price by $30. I think they need more help then that.

  31. I applaud the vp’s and nvp’s that had the integrity to walk and not take their teams down this dark path . I poured my heart ,soul and money into this company for 5 yrs and it left me in debt. I keep hearing I could pay it all off with one check from Arbonne someday, just hang in there. I hope when that check arrives, it clears the bank, seems consultants check for $6 bucks are bouncing.
    Don’t know how you could possible be a person of integrity and offer this opportunity to anyone.
    Know I understand why the founder’s son and Candace keefe left in 2008. They could not be a part of this anymore.

  32. What… no posts in a while??? yesterday’s news…btw, I just got my direct deposit from Arbonne…as expected…and it wasn’t 5 or 10 bucks…there is a reason my wife and I are top 50 in this company…we have stayed and lived through all the crap…This is the only MLM we have ever done, and we have always treated it like a “Business” period. The DSA (dsa.org) has informaiton on Arbonne on its own homepage, and people that are being recruited during this restructing period are violating the DSA code of ethics. Go to http://www.mlmhelpdesk.com under companies and click Arbonne and get some actual facts…or wow..maybe check arbonne to get actual facts…and btw, the founders son will be at NTC next month speaking…geez people work on your business even if its not Arbonne…advice…stick to your growing your biz…whatever it is…and actually stay and work it for years….you will have to go “many bumps” in every biz…

  33. Chris, good for you that you are in the top 50 but what does that have to do with ARbonne. I don’t think your volume alone can sustain the company.

    First, in regards to Stian, he was let go when Bob Henry was there. He wanted to stop some of these Top 10 ENVPs when they were going crazy with telling their prospects to buy 12 re9 sets. Then these new consultants were stuck with products and wanted out. Bob didn’t care as long as the sales where there.

    If you go to To ARbonne or not to ARbonne , you can see where that story began. It was back in the end of 2005 and beginning of 2006 when the trouble was brewing. Stian was not happy with it.

    Anyways, he was on a call about a month ago before the Chapter 11 news came out. It was Donna that was the influence for this call. They had a good response with the call since he touched on how his dad started the company.
    Then the idea came to ARbonne to bring him to NTC, Now more then ever they need to see the vision of Petter. Stian
    is there to help. He was always a great guy and I hope ARbonne pays him well for this. He didn’t deserve to be let go. HE was let go just before his dad died.

    However, Chris, I’m sure you know since your wife is an ENVP and you helped her in the financial part of her business as a partner. I think I heard you talk.. Your wife is Amy, short blond hair I believe.

    Anyways, I’m glad you are doing well but you have to understand and you know too that things were going on with ARbonne before. We can’t sugar coat this mess that has been under the carpet for a few years.

    You never have a second chance to make a first impression. There is only NOW so ARbonne has to get moving and remember that with great power comes Great responsibility.

  34. Btw, if you remember, Donna Johnson was with Jafra and she was shown ARbonne and come over to Arbonne. She had mentioned that before in her story. So, to say that it is illegal is nonsense since many people came from other companies to ARbonne. Doesn’t that mean then, that ARbonne consultants too, went to other people who were part of other MLM companies and does that mean they were wrong.

    Now back then, they didn’t have email but she was still spoken to about ARbonne and brought many of her clients and business builders over.

  35. MonaVie is in the DSA and has recruited and paid dozens of leaders to leave their company and go to MonaVie. The DSA is a bit selective in terms of enforcing their rules.

    And, are you really going to tell me that it is unethical to make an offer to someone who is working a company that lost 50% of it’s volume in the last 2 years and filed for bankruptcy?

    C’mon people. Think.

  36. Head hunters are always recruiting in the corporate world.
    The top guy in Arbonne Canada-Stuart McMillan left. The guys at Univera offered him a better offer. So it happens everywhere.

  37. All I’m saying is that my wife and I have to move forward…and we choose to do it (and stay) with Arbonne…I never said it was illegal?? So I’m confused on that part…I’m just making reference to the DSA page, and btw I will never say any information about another MLM company…like I said earlier, my advice is to “stay” and stick with a company and “work” it for years…not months…I know all about the Bob & Stian situtation…but one thing I know, regardless…I can’t change the past, I can only focus on today and the future, I honestly don’t get wrapped up in certain things, because my focus is building. AND, yes it does happen when people recruit, we have been recruited MANY times with money offers to bring our 20k people downline…, I don’t get mad and talk bad about that company (it would make me look foolish) I just say “no thank you, best of luck” Yes, we have taken a hit in Arbonne honeslty, but its biz, I used to own several RV dealerships…good thing I sold out when I did because look at that industry..hello…product line was Fleetwood. Fleetwood is a company that lost 70% of its volume in the last 2 years and filed for bankruptcy…and they are coming back strong…after their reorg..yes I know its a different industry…I wish there was things I could change, but I can’t change the past, I’m only saying to “stay” with whatever works for you…I consulted with NEstle when they bought/merged with Carnation…that was quite the event…talking about the worlds largest food conglomerate…but in the end, it was fine…I also helped my father with a Chp. 11 BK, so I know personally what a Chp. 11 means, I have been through it…I personally have created other avenues of profit centers for my family and I, but I’m true to Arbonne and we will not leave…if something happens… well I can’t change that..I can only focus on what we need to do…and our Arbonne numbers for last qtr of 09 where better then the last qtr for 08, and Feb. 10 numbers are better then last year…I’m just trying to work my biz the best I can..
    I wish the best for everybody in their own ventures..

  38. Hey Chris,

    Congrats on soberly weighing your options and making a clear decision.

    Do you worry about the ability of the newest consultant to duplicate what you and your wife has done given the current conditions?

  39. Ty-
    Yes, it will be something we have to deal with and overcome it….in time. Ty, I really don’t know you…but you know how it is…people will get mad regardless…”your company is bk” or “you jumped from that company” or “our product is better then yours” or “oh yea…your former CEO left you to come to our company” it happens…I will just have to deal with the current conditions and be positive..and we both know if the person is driven and they love the product..they can make it work because “They” want to…Thanks for the congrats, and best of luck with your company and blog.

  40. Actually, the reason why the last quarter of 09 was strong is, they lower the qualifications in being AM, RVP and NVP. This was one of their ways to get people motivated since they lower the RV to be a VP by 20%. So basically people promoted to these positions but they would not have done on the old numbers. They also needed higher numbers because back in Sept/Oct Rita actually said we need to get 400 million fast. She said that on a VP call and I think that was a mistake to do. That is how the information leaked to everyone. NVPs started to confess and quit.

    Chris I’m sure you and Annette have done well and it is great but you both only represent not even 5% of the company. Yes, the car industry is different and let’s face it they own GM and the media is helping right now by putting Toyota down. I guess the bad news is helping us here in the Car industry. People are starting to buy AMerican made cars. However Cars and skincare-two different things. GM is a big staple in this economy.

    Glad that your numbers are up. I’m sure it will be easier to just sell instead of trying to get business builders. Not too many people would be brave enough to do it when Chapter 11 is around. The products are good and yes, it is a long road ahead.

  41. Just wanted to say that I’m finally over being mad. I didn’t like how Arbonne treated my wife after 5 years in the business but when it should have been a live and learn type of thing I let it get to me and mouthed off and said some things that I honestly regret. For that I truly apologize.

    We made a decision that has been the best thing ever for us. It was a difficult and trying time but we are over the hump and we are promoting people left and right.

    Perhaps my friends in Arbonne will find the determination to use the recent events to motivate themselves and their team through these difficult times and come out way ahead. I hope you do. You who are my friends are women of integrity and I have every confidence that you will represent yourselves well.

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