The Body Shop is considering a deal to decrease its tax liabilities and generate additional funds for creditors impacted by its administration, according to The Times. FRP Advisory, the company’s administrator, has proposed a plan to retain £66 million in tax benefits accrued before insolvency, potentially lowering future corporation tax obligations if the business emerges from administration and becomes profitable again.
Meanwhile, the costs of staff redundancies resulting from store closures are expected to be covered by the UK government’s Redundancy Payments Service, funded by national insurance contributions. British lawmakers have called for transparency regarding the potential financial burden of The Body Shop’s administration on taxpayers.
Reports are suggesting that FRP Advisory is considering initiating a Company Voluntary Arrangement (CVA) as part of efforts to stabilize the struggling business’s future. The accountancy firm has prepared plans for a CVA, involving negotiations with landlords for rent reductions and discussions with other creditors. This potential CVA represents the latest attempt by Aurelius to rescue the ethical beauty retailer, following the administration of its UK and Germany operations on February 13th.
The proposal has been formulated jointly by private equity firm Aurelius, which acquired the business several months ago, and FRP Advisory. This plan follows the announcement by the retailer regarding the closure of 75 stores in the UK and the loss of nearly 500 jobs, leaving 116 stores still in operation.
