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The Body Shop plans to cut tax bill if it exits administration

Sophie Smith
15 April 2024

The Body Shop administrators are preparing a deal to reduce its tax bill when the business returns to profitability to provide extra cash to creditors facing losses after its collapse.

FRP Advisory has drawn up plans to retain £66 million worth of tax benefits built up before the British brand fell into insolvency as it seeks creditors approval for a restructuring deal, according to The Times.

The creditors will benefit from a proposal to protect tax losses that could be used to reduce corporation tax due in the future, if The Body Shop can be saved and continue solvent trading.

Sources claimed creditors would be likely to secure a dividend reflecting the value of the tax asset if they voted for a company voluntary arrangement. Such a deal is often used to reduce the brand's rent bill, the publication emphasised.

However, it is understood that The Body Shop's planned CVA will not result in meaningful rent reductions for landlords.

The proposed deal would allow the brand's private equity owner Aurelius to return more cash to creditors as a dividend when The Body Shop exits administration.

Aurelius has drawn up the plans with FRP Advisory ahead of a meeting held to answer questions from creditors and vote on the proposal.

The Body Shop collapsed into administration in the UK earlier this year, shortly after new owners, European private equity firm Aurelius, took control of the business.

Aurelius, which specialises in buying and turning around troubled firms, secured a £207 million deal in November to buy the Body Shop from Brazilian cosmetics giant Natura & Co.

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