The e-cigarette manufacturer plans to lay off 30 percent of its employees

By: Trademagazin Date: 2023. 08. 23. 10:03

The company Juul Labs plans to lay off 30% of its workforce. The company, which has long been on the brink of bankruptcy, introduced an e-cigarette that filters out minors last month. Even last year, the e-cigarette manufacturer narrowly avoided bankruptcy by relying on major investors. After the U.S. Food and Drug Administration (FDA) banned the sale of the company’s products and instructed retailers to remove Juul e-cigarette devices and pods from their shelves last summer, the company’s appeal temporarily suspended the action, but investors remained concerned.

The management is still striving for capital infusion or a sale. The company’s situation is worsening as it aims to conquer the school catering sector. The FDA ban has cast a shadow, and the British Medicines and Healthcare Products Regulatory Agency reported strange side effects reported by e-cigarette users, including blurred vision, watery eyes, dizziness, fatigue, and ringing in the ears.

According to reports from The Wall Street Journal, Juul Labs is in talks with two anchor investors about a bailout package to avoid bankruptcy. The two major shareholders, Nick Pritzker, heir of Hyatt Hotels, and Riaz Valani from California, are seriously considering investing money to sustain the company’s operations and cover short-term legal obligations. The bailout package could keep Juul afloat while the legal dispute with the FDA is ongoing. However, there has been no decision yet, according to sources familiar with the matter.

It’s possible that Juul might still throw in the towel. The potential for bankruptcy defense is supported by recent additions of two restructuring experts to the board of directors. Prior to negotiations with the two investors, substantial preparations were made for a potential bankruptcy scenario. In early October, they even held a meeting with creditors.

Although the FDA suspended the sales ban imposed in June due to Juul’s appeal, the company’s sales have slowed down. Furthermore, the company is facing thousands of lawsuits. The lawsuits claim that e-cigarettes were sold to children and teenagers. The first trial is scheduled for November, initiated by the San Francisco Unified School District, and other cases could go to court next year.

Juul defends itself by claiming that it never targeted underage users. After entering the market, Juul drew regulatory attention for the first time four years ago. The FDA began investigating its fruit-flavored e-cigarette pods. The result of the investigation and the accompanying media campaign led the company to stop producing fruit-flavored products in 2019 and cease its advertising activities, which critics claimed specifically targeted young people. By that time, Juul devices were held responsible for nine mysterious deaths and several hundred other severe illnesses, with the public blaming the company for the rapid spread of e-cigarette use among teenagers.