The Body Shop administrators are pushing for a deal which would allow the business to continue trading and avoid store closures.
Administrators for the retailer have confirmed they are lobbying for a company voluntary arrangement which would let the firm to keep trading and pay off its debts.
The company collapsed into administration last month, putting 200 stores at risk.
Aurelius, which bought the Body Shop less than four months ago, reportedly supports the administrators’ plan.
The £600,000 owed to employees for pay, pension contributions and holiday pay from the company would be paid in full under the plan.
However, even if the proposed company voluntary arrangement (CVA) failed, that money should still be paid out.
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The Body Shop could continue to trade under the proposed plan
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In February, the Body Shop announced its plans to bring in administrators after previous forecasts for how much funding it would need going forward fell short.
According to the administrators, hundreds of jobs at the retailer would be lost and dozens of shops closed.
Previously, the company expected that its peak funding requirement would be £63million, but it later had to revise this forecast to “in excess of £100million”.
Combined with a “poor trading performance”, this deficit meant The Body Shop shareholders “could not commit to the required level of funding,” a report from FRP Advisory claimed.
In mid-November 2023, Aurelius announced it had agreed a deal to buy the retailer’s parent company Natura & Co, which was completed by the end of the year.
After the acquisition, “it became apparent that the short-term cash position of the company was adverse to that that had been forecast”, administrators said.
During the 2023 festive period, The Body Shop “depleted” its stock and repaid what it owed from a £60million loan facility.
Over this period, the cosmetics and skincare company’s debts to creditors also increased during the period.
The FRP Advisory report said: “As a result, January 2024 saw a higher requirement to fund working capital plus certain exceptional costs that were not foreseen.”
Originally founded in 1976 by Dame Anita Roddick, the Body Shop made a name for itself by selling cruelty-free fairtrade products.
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The Body Shop previously said it would shut nearly half of its 198 shops in the administration process
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However by the late nineties, administrators determined the firm was “no longer offering a distinctive product” at a reasonable price.
The company was sold to cosmetics giant L’Oreal which the FRP claimed “deviated from core values” that made the Body Shop brand unique.
By 2017, the Body Shop had been taken over by Natura as it look to revert back “to its founding principles”.
When it was bought by Aurelius, The Body Shop had 197 shops in the UK, operating in more than 20 other countries with franchises in another 68 countries.
In February, FRP announced 329 redundancies at the Body Shop’s head office and distribution centres. It also announced seven shops would close “immediately” with workers in the affected sites being made redundant.
Weeks later, administrators confirmed another 75 shops would close, impacting 425 employees.
