The Body Shop’s UK arm owed more than £276 million to creditors including landlords, suppliers, tax authorities and its international divisions when the ethical beauty retailer collapse in February, it has emerged as it appealed to landlords to cut rent as part of a rescue deal.
Avon, the cosmetics group owned by The Body Shop’s former parent company Natura, is the biggest trade creditor – owed just over £13 million for products it manufactured, according to a report by the administrators FRP who were appointed to the UK arm of the ethical beauty retailer in February.
Total debts at the failed group add up to more than £276 million, of which £6.3 million is tax owed, £44 million is money owed to trade creditors, £63 million is from lease liabilities and other borrowing, and £143 million relates to “related suppliers” understood to be other parts of the business.
The report does not reveal the extent of further debts owed to the group’s largest secured creditor, Aurelius, the German restructuring specialist that bought the retailer last year.
The private equity company put the UK arm of The Body Shop into administration in February less than three months after taking control, putting more than 2,200 jobs at risk.
In a report published on Friday, administrators said they believed they would be able to raise enough cash to ensure The Body Shop’s UK tax bill was paid and that staff would receive holiday pay, pension payments and other arrears, but they could not outline how much suppliers, landlords and other unsecured creditors might receive.
One major asset up for sale will be the brand rights to the Body Shop name – worth £7.9 million, according to FRP – which had been thought to be controlled by Aurelius. However, the administrator has now established that the transfer of the brand was not completed before The Body Shop’s collapse.
The availability of the brand rights could clear the way for an auction of The Body Shop, which was previously seen as unlikely because of Aurelius’s ownership of the brand. Interested parties are thought to include Next.
The report says The Body Shop collapsed after a $76 million (£60 million) credit facility was repaid to its former owner, the Brazilian group Natura, shortly before the change of ownership and leaving the company with greater demand for investment than its new owners had foreseen.
Administrators are planning to launch an insolvency process called a company voluntary arrangement, which is intended to cut rents at the group’s remaining stores. No further store closures are expected in the UK at this stage.
If the CVA is successful, Aurelius has agreed not to seek repayment of secured loans it made to the business shortly before its collapse.
Since The Body Shop called in administrators, about 82 of the 197 UK stores have closed, with the loss of more than 425 jobs, while a further 329 jobs have gone at head office.
Operations in the US, Germany and Belgium are being shut down after those businesses were either sold off or deprived of cash by the administration of the UK parent.
The group’s Canadian division closed 30 of its 105 stores, and its Australian and New Zealand operation is struggling to find enough cash to continue. On Thursday, a court in France put the Body Shop’s 66 stores there into administration with the aim of trying to find a buyer for the business.
By Sarah Butler
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The Body Shop Files for Bankruptcy in the US and Canada
The Body Shop has filed for bankruptcy in the US and Canada and is struggling to pay suppliers in Australia as the group’s most profitable overseas businesses struggle with cash shortages after its UK parent’s collapse last month.
