Miyoshi America - Chapter 11 Case Summary

Business Description

Headquartered in Dayville, CT, Miyoshi America, Inc. ("Miyoshi" or the "Debtor") is a Texas-incorporated company that processes and sells specialized ingredients—including pigments, composites, and substrates—to cosmetic manufacturers, who use them to enhance the look, feel, and durability of makeup and other beauty products. The Debtor's sole equity holder is its parent, Miyoshi Kasei, Inc. ("MKI").

• The Debtor's primary business involves treating raw and intermediate materials with special ingredients to give them qualities more favorable for consumer cosmetics products. Specifically, the Debtor treats substrates—base ingredients that undergo transformation to support other compounds—to change how the materials behave in a given cosmetic formula and on the skin.
  • The Debtor purchases these substrates, particularly iron oxides and titanium dioxides, from other manufacturers or suppliers and treats them so that they can be used in cosmetic products, particularly for the enhancement of color pigments and the improvement of product duration and feel.
• In addition, the Debtor manufactures a line of ingredients used in sunscreen products.

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Corporate History

The Debtor was incorporated in 1985 as "U.S. Cosmetics Corp." In 1997, U.S. Cosmetics Corp. merged with "Miki America, Inc.," with Miki America acquiring the assets of U.S. Cosmetics Corp. under the U.S. Cosmetics Corp. name. In 2016, U.S. Cosmetics Corp. changed its name to "Miyoshi America, Inc."

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Operations Overview

The Debtor primarily operates out of its owned headquarters in Dayville, Connecticut, and also rents a lab and sales office in Valley Cottage, New York, pursuant to a lease agreement with Valley Cottage Owner, LP, which runs through November 30, 2031. The Debtor remains current on all taxes, utilities, and property-related costs with respect to its Dayville property as well as all amounts owed under its leased New York facility.

Governance and Workforce

• Since its inception, the Debtor has operated as a standalone business with its own board of directors and an independent management team. The board consists of Edward Houlihan (Vice President), Taizo Miyoshi, and Tim (Kaoru) Takagi, who also serves as the Chief Executive Officer of Miyoshi.
• The Debtor employs approximately 62 employees who work at its facilities in Dayville, Connecticut and Valley Cottage, New York.

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Prepetition Obligations

The Debtor's assets—consisting of real estate, equipment, several cash accounts, accounts receivable, raw materials, inventories, certain prepaid expenses, certain intangible assets (such as intellectual property) and goodwill, and other tax assets—collectively have a book value of approximately $30.7 million. The Debtor's prepetition capital structure is summarized below:

Prepetition Loan

• Miyoshi's sole source of funded debt is its Prepetition Loan with its parent, MKI, with an outstanding principal amount of $15 million as of the date of the First Day Declaration.
  • On June 10, 2025, the Debtor and MKI entered into an Intercompany Loan Agreement pursuant to which MKI advanced a loan with an original principal amount of $3 million (the "Initial Prepetition Loan"), intended as an emergency stop-gap measure while alternative financing options were sought and evaluated.
  • On August 1, 2025, the parties entered into an Intercompany Loan and Security Agreement (as subsequently amended, the "Prepetition Loan Agreement"), under which MKI agreed to refinance the Initial Prepetition Loan and fund up to $7 million of additional loans, for a total facility amount of $10 million.
  • On January 27, 2026, the parties amended the Prepetition Loan Agreement to increase the size of the facility to $15 million, after the Debtor was unable to identify an alternative source of funding.
  • The loans accrue interest at 7.50% per annum and are secured by perfected first-priority liens on substantially all assets of the Debtor, including pursuant to applicable UCC financing statements, a recorded real estate mortgage, and filings with the U.S. Patent and Trademark Office.
  • Proceeds have been used to fund the Debtor's daily working capital needs and to satisfy part of its talc-related litigation costs and expenses.

Trade Debt

• The Debtor incurs trade debt in the ordinary course of business with numerous suppliers and vendors. A majority of these counterparties conduct business with the Debtor via purchase order rather than pursuant to long-term purchase agreements, and are paid on prearranged terms.
• The Debtor is substantially current on its unsecured trade debt, with approximately $2.65 million of supplier and trade debt outstanding as of the date of the First Day Declaration.

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Events Leading to Bankruptcy

Talc Personal Injury Litigation

The primary purpose of the Chapter 11 Case is to address and comprehensively resolve alleged talc- and asbestos-related liabilities asserted against Miyoshi based on allegations that Miyoshi supplied talc products purportedly containing asbestos that allegedly caused harm to talc plaintiffs. Although Miyoshi vigorously disputes all such liability, the escalating volume of talc litigation claims, associated ad hoc settlements, and ever-growing litigation costs have become unsustainable and have caused significant financial distress to Miyoshi, a company with limited and finite assets.

• Historically, a small component of the Debtor's business—approximately 5% of sales—involved the sale of surface-treated talc-based cosmetics ingredients sourced from suppliers in Japan. Due to decreasing industry demand, the Debtor began scaling back its talc-based offerings in the early 2020s and fully discontinued sales of talc-based products in mid-2025.
• The Debtor maintains that it has never dealt in talc-based products containing any talc other than cosmetic talc, and has never produced non-cosmetic talc-based products such as "baby powder" or other body or foot powders. The Debtor has never had a case filed against it asserting body powder–type claims, such as allegations that its products caused ovarian cancer.
• Prior to discontinuing sales, the Debtor required its suppliers to test their talc and talc-based products for asbestos contamination and provide test results, and the Debtor routinely tested talc-based products it received using the widely accepted "CTFA J4-1" X-Ray diffraction method. None of the Debtor's testing ever indicated asbestos contamination, and the Debtor never received a record of any customer's supplementary testing identifying contamination in the Debtor's products.

Acceleration of Claims and Liquidity Strain

• Despite these practices, the Debtor is currently named as defendant in approximately 270 personal injury cases asserting that its talc-based products were contaminated with asbestos, resulting in mesothelioma or similar allegations. The first such case was filed in 2015, with additional small numbers of filings in 2017 and 2018.
  • Beginning in 2022, the pace of filings accelerated sharply, with five cases filed in 2022, 35 in 2023, 34 in 2024, and 167 in 2025.
  • The Debtor has been overall successful in resolving these cases without trial—through dismissal, summary judgment, or settlement—and has never had a judgment entered against it in a mesothelioma case. No employee of the Debtor has ever developed mesothelioma or asserted such a claim against the Debtor.
• By mid-2025, however, the costs of defending the growing volume of cases had resulted in an insurmountable strain on the Debtor's liquidity. The Debtor's decision to pursue a global resolution under section 524(g) was prompted by the growing number of filed claims, coupled with: (i) increased settlement demands on pending claims; (ii) anticipated future Talc Personal Injury Claims; and (iii) limited availability of insurance coverage, if any, for the defense or resolution of such claims. Absent a Chapter 11 filing, these costs would have completely eroded Miyoshi's remaining liquidity, likely forcing a near-term liquidation.

Prepetition Advisor Engagement and Negotiations

• Mayer Brown LLP has acted as national talc litigation defense counsel for the Debtor since late 2024 and was retained as restructuring counsel in early 2025. The Debtor subsequently engaged Alvarez & Marsal North America, LLC as financial advisor and claims consultant in April 2025, and Smith Goffman Partners as restructuring advisor and investment banker in May 2025. The Debtor also retained PolicyFind, an insurance archaeology firm, to investigate any unknown insurance policies that could provide coverage for asbestos-related claims.
• In July 2025, the Debtor directed its advisors to begin reaching out to plaintiffs' law firms to discuss potential resolution options. Between July and September 2025, the Debtor entered into confidentiality and non-disclosure agreements with seven firms: Belluck Law LLP; Dean Omar Branham Shirley, LLP; Levy Konigsberg LLC; Maune Raichle Harley French & Mudd, LLC; Meirowitz & Wasserberg, LLP; Simmons Hanly Conroy LLP; and Simon Greenstone Panatier, PC.
  • In September 2025, those seven firms organized into the Ad Hoc Committee, which collectively represented more than 85% of pending Talc Personal Injury Claims at the time. In January 2026, an eighth firm, SWMW Law, joined; as of March 2026, these eight firms represent approximately 90% of filed cases against the Debtor.
  • The Ad Hoc Committee engaged Caplin and Drysdale as bankruptcy counsel, Gilbert as insurance counsel, and Province as financial advisor.
• In January 2026, the Debtor, with the approval of the Ad Hoc Committee, engaged Hon. Shelley C. Chapman (Ret.)—a retired United States Bankruptcy Judge with prior experience as a future claimants' representative in asbestos bankruptcy cases—to serve as the Prepetition Future Claimants' Representative.
• Beginning in fall 2025 and continuing into early 2026, the Ad Hoc Committee, the Prepetition Future Claimants' Representative, and their advisors conducted a months-long due diligence process. The investigation included independent review of the Debtor's historical involvement with talc, the nature and extent of its talc- and asbestos-related liabilities, the projected value of present and future Talc Personal Injury Claims, the Debtor's insurance coverage, and the viability of estate claims against MKI, including review of intercompany contracts, sales of goods, license and royalty arrangements, and historical dividend payments from the Debtor to MKI.
  • The Debtor produced hundreds of thousands of pages of records to members of the Ad Hoc Committee and made a representative available for a deposition.

Term Sheet and Plan

Following months of rigorous, arm's-length negotiations, on January 30, 2026, the Ad Hoc Committee presented the Debtor with a proposed final Plan Support and Restructuring Term Sheet (the "Term Sheet"), executed by each member of the Ad Hoc Committee. Shortly thereafter, the Debtor, MKI, and the Prepetition Future Claimants' Representative countersigned the Term Sheet, which outlined the resolution of the Talc Personal Injury Claims on the following key terms:

• Talc Personal Injury Trust: On the Effective Date, a Talc Personal Injury Trust will be created and funded by, among other things: (a) a cash contribution by the Debtor on its own behalf and on behalf of its non-debtor affiliates in the amount of $19 million (the Miyoshi Effective Date Cash Contribution); and (b) a promissory note issued by the Reorganized Debtor with a stated principal amount of $1 million, a maturity date six months following the Effective Date, and secured by a first-priority lien on 50.1% of the equity interests of the Reorganized Debtor.
  • Certain potential insurance rights and Assigned Causes of Action will also be assigned to the Talc Personal Injury Trust.
• Talc Personal Injury Channeling Injunction: Effective as of the Plan's Effective Date, a permanent injunction will be issued under sections 524(g) and 105(a) of the Bankruptcy Code channeling all Talc Personal Injury Claims and Demands against any Protected Party to the Talc Personal Injury Trust, which will assume sole responsibility for processing and resolving such claims.
• Issuance of Equity in Reorganized Debtor to MKI: In consideration of, among other things, its funding of the Miyoshi Effective Date Cash Contribution, MKI will be issued 100% of the equity interests in the Reorganized Debtor, subject to the rights of the Talc Personal Injury Trust in connection with the Miyoshi Promissory Note and related pledge agreement.

Solicitation and Chapter 11 Filing

• The Debtor, the Ad Hoc Committee, the Prepetition Future Claimants' Representative, and Stretto, Inc., the Debtor's claims, solicitation, and noticing agent, devised a comprehensive prepetition solicitation process designed to avoid the procedural pitfalls that have undermined solicitation efforts in other talc-related bankruptcies. The Debtor authorized the Claims Agent to begin solicitation on March 13, 2026.
  • Solicitation was successful, with more than 99% of holders of Talc Personal Injury Claims voting to accept the Plan.
• To ensure continued operations and fund the reorganization, the Debtor is seeking Bankruptcy Court approval of a DIP Financing Facility from MKI, consisting of an additional $5 million of new financing plus a roll-up of the Prepetition Loan, which was the result of extensive arm's-length negotiations undertaken in connection with a marketing process pursued by Smith Goffman Partners. The proposed order also reflects an agreement with MKI regarding the use of Cash Collateral.