The Body Shop Was Deep in Debts At the Time of Closing, 276 Million Euros Owed to Creditors

The Body Shop Store (Credits: Hand-Out)

The collapse of The Body Shop’s UK arm in February revealed debts exceeding £276m owed to various creditors, including landlords, suppliers, tax authorities, and international divisions. As part of a rescue deal, the company appealed to landlords to reduce rent.

Avon, owned by The Body Shop’s former parent company, Natura, is the largest trade creditor, owing just over £13m for manufactured products.

The administrators FRP, appointed to oversee the UK arm, reported total debts of over £276m, with significant amounts owed to tax authorities, trade creditors, lease liabilities, and related suppliers.

Brand rights to The Body Shop, valued at £7.9m, will be a major asset for sale. (Credits: The Body Shop)

The report does not disclose the extent of debts owed to the largest secured creditor, Aurelius, a German restructuring specialist who acquired the retailer last year.

Aurelius placed the UK arm of The Body Shop into administration, jeopardizing over 2,200 jobs.

Administrators expect to generate sufficient funds to settle The Body Shop’s UK tax obligations and ensure that employees receive owed payments.

However, the report does not specify the potential returns for unsecured creditors such as suppliers and landlords.

The Body Shop Products (Credits: The Body Shop)

Previous assumptions about Aurelius’s control over the brand have been disproven by the administrator, potentially paving the way for an auction of The Body Shop. Interested buyers, including Next, are being considered.

The collapse was precipitated by the repayment of a $76m credit facility to former owner Natura, leaving The Body Shop with unexpected financial demands.

Administrators plan to implement a company voluntary arrangement (CVA) to reduce rents at remaining stores, with no immediate plans for further closures in the UK.

The Body Shop Employees (Credits: Hand-Out)

If successful, Aurelius has agreed not to pursue repayment of secured loans provided before the collapse. Since administration, a significant number of UK stores have closed, resulting in job losses both at stores and the head office.

Operations in the US, Germany, and Belgium have ceased, while restructuring efforts are underway in Canada, Australia, New Zealand, and France.

Nate O'Hara
Nathan is a seasoned commerce writer with a passion for unraveling the intricacies of the business world and distilling them into engaging narratives. During his academic journey, he delved deep into subjects like economics, marketing, and entrepreneurship, honing his analytical skills and developing a keen understanding of market dynamics.