The Body Shop Bankruptcy: What Happened and What’s Next?

The Body Shop Bankruptcy has sent shockwaves through the beauty retail industry. The company, which once championed ethical beauty, has struggled financially in recent years. After its collapse in February 2024, it now faces challenges in paying back the money it owes.

Unsecured Creditors and Limited Repayments

The Body Shop Bankruptcy led to significant financial losses for many unsecured creditors. These creditors, including suppliers, landlords, and charities, will reportedly receive only a portion of the £219 million (US$283.4 million) owed. Unsecured creditors will get between 16% and 27% of the money they are owed, leaving many with significant losses.

Despite these challenges, The Body Shop Bankruptcy will see full reimbursement for tax authorities and employees receiving any holiday pay owed. Unfortunately, most creditors will only recover a small fraction of their claims, affecting small charities like Children on the Edge and MindOut.

Acquisition by Auréa Group

After The Body Shop Bankruptcy, the company was acquired by Mike Jatania’s Auréa Group for £44.3 million (US$57.3 million). This deal saved 113 stores and 1,300 jobs. However, prior to the collapse, The Body Shop owed more than £276 million (US$357 million), including significant amounts to suppliers, landlords, and taxes.

Despite the financial struggles, Charles Denton, the current CEO, reported a £2 million (US$2.58 million) profit in the first 100 days under new ownership. This new phase could help the company recover, but the long-term future remains uncertain.

Global Challenges and Other Bankruptcies

The Body Shop Bankruptcy is part of a wider trend of financial struggles in the beauty industry. The company’s collapse followed several bankruptcies in multiple countries, including Canada, Germany, and Belgium. Additionally, other brands like Rituals have faced legal challenges, such as trademark infringement claims, during their own bankruptcy processes.

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