Pat McGrath, the makeup artist behind Taylor Swift's signature red lipstick, has agreed to cede control of her cosmetics empire to GDA Luma Capital Management in a bankruptcy restructuring deal. Under the terms, GDA Luma will acquire a 65% common equity stake in Pat McGrath Labs while forgiving over $43 million in debt.

The restructuring follows Pat McGrath Labs' bankruptcy filing less than two months ago to halt a foreclosure sale. GDA Luma has provided $10 million in Chapter 11 financing and committed up to $20 million to fund the company's exit from bankruptcy protection. McGrath will retain her role as chief creative officer and maintain an undisclosed minority stake, including preferred equity for bankruptcy financing she provided.

The deal sets aside additional equity for a management incentive plan and requires approval from a Florida bankruptcy judge. The restructuring aims to provide a fresh start for the luxury beauty brand, whose products are sold at Nordstrom, Harrods, Bergdorf Goodman, and retailers Sephora and Ulta Beauty. McGrath's collaborations with Swift and Louis Vuitton have helped establish the brand as a prestige player in the competitive cosmetics market.