A massive beauty company now begins to liquidate and effectively ceasing all operations in the US, sources have confirmed.
The Body Shop’s US operation has been led into liquidation as its UK parent now takes its cash, reports Retail Dive.
The US subsidiary ceased operating as of March 1, and told a bankruptcy court it didn’t get advance notice of its British owner’s restructuring.
Of the 66 total locations in the United States, seven were in New York—the second-most of any state.
The Body Shop International Limited filed for administration under U.K. insolvency laws “with no advance notice to, or pre-filing discussion with” its wholly-owned U.S. subsidiary, per the filings.
Moreover, the companies’ business arrangement included a centralized money management system where the U.S. operation’s cash “was swept on a daily basis” to a concentrated account, then advanced back to fund U.S. expenses.
But the U.K.-based parent, having taken in all the U.S. cash prior to filing for administration, has held onto it since, “thereby preventing the [U.S.] Company from paying its vendors and satisfying other obligations,” per the filing.
In an unfortunate event, it has led to a Chapter 7 filing, the company said.
The U.S. operation has assets of between $50 million and $100 million, and liabilities of between $10 million and $50 million, according to court documents.
Previously, in a press release detailing its intention to file for bankruptcy in Canada, The Body Shop Canada Limited stated that, effective March 1, “The Body Shop US Limited has ceased operations.”
Unlike the situation in the U.S., however, The Body Shop Canada is open for business as it “evaluates its strategic alternatives and implements certain restructuring initiatives,” though its website is down and 33 of its 105 stores have been slated to close.
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Also Read: A Massive Mall Retailer Is Now Closing in California
Other Economy News Today
A book retailer now makes unexpected plans to close all locations following a bankruptcy that fans hoped would help the company.
Tattered Cover filed for bankruptcy last October and the company’s CEO has released a new update on its case.
CEO Brad Dempsey said the company has submitted a revised plan to lift itself out of financial troubles, but this had to be approved by the U.S. Bankruptcy Court for the District of Colorado, according to the Denverite.
The Colorado book chain has two locations in Denver, one in Littleton, and one in Aurora.
CEO Dempsey said the company was considering several cost-cutting measures and these could look at possibly moving the current stores to cheaper retail spaces, per Tattered Covers’ website.
He added that the chain could become “a smaller, more modern and financially sustainable business.”
“Without a doubt we still have complicated negotiations to complete, challenging local economic pressures to navigate, and difficult decisions to make as we forge ahead toward establishing profitability,” Dempsey said in a statement.
“But with the continued hard work of our incredible team and support from people in Colorado as well as across the nation, we are optimistic about Tattered Cover’s future.”
Dempsey predicted that the company could break out of bankruptcy by June 2024.
He said it hoped to do this by making $3.4 million to cover unsecured debts and fix its relationship with partners.
Parts of the CEO’s optimism has come from a strong holiday season which generated lots of sales and money for Tattered Cover, reports The-Sun.
“Despite this, the company’s expenses could also increase due to due higher wages, rents, and health insurance premiums.”
The unapproved debt plan hopes to see the company out of debt by 2025 and the U.S. Bankruptcy Court for the District of Colorado is expected to hear the plans in May, according to the Denverite.
Other retailers have had to reconsider the fate of some of their physical retail locations.
The U.S. Sun previously reported that a Mooks-A-Million store in Lafayette, Louisiana had started a closing down sale.
The sale started on December 24 and Google Maps confirmed that the store has down officially closed.
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Also Read: Another Business Now Announces Unexpected Layoffs in Kentucky
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