June 13, 2024
Aspiring lawyers interested in corporate law, and especially in restructuring and insolvency related practice areas, should follow The Body Shop’s administration closely.

What’s the context for The Body Shop?

The Body Shop is a household name retailer in the UK, but started out as a one-off independent health and beauty shop in Brighton back in 1976. The founder, Anita Roddick, was focused on developing products which aligned with strict standards in relation to various ESG factors. For example, all products were designed to be cruelty-free, feature natural ingredients, minimise their impact on the environment during the production process, etc (it was for this work that Roddick would later be awarded a DBE (officially becoming Dame Roddick). 

The business developed quickly with the help of her husband, and they quickly adopted a franchise model which saw rapid expansion – initially in the UK, but eventually worldwide.  

In 1984, the company went public (following a highly publicised IPO, as is often the case with big-name organisations), eventually landing on the London Stock Exchange, and saw tremendous stock growth of almost 11,000% in eight years. 

In 2006, the Roddicks agreed to sell up, transferring ownership over to cosmetics giant L’Oréal in a takeover deal worth over £650 million. This caused some controversy at the time, with many devoted customers questioning whether such a large retailer (naturally coming with various historical ESG issues) could maintain the ethos of The Body Shop. However, the impact this had on its customer base going forward is still a matter of some debate.

Why did the Body Shop enter administration?

Since the L’Oréal sale, ownership has changed hands a number of times. 2017 saw a sale to Brazilian company Natura for over £850 million, and, finally, late 2023 saw the sale of The Body Shop to German private equity firm Aurelius. The asking price this time was just over £200 million.

While this was seen as a healthy ‘sale’ price at the time, recent months have seen financial issues at both Aurelius and The Body Shop, which eventually led, in February 2024, to the announcement that Aurelius had put the Body Shop UK into administration. This was soon followed by similar announcements at Body Shop Germany, Denmark, Canada, USA, and more. 

Back in the UK, Aurelius explained that they had encountered issues with financing after HSBC had withdrawn some of their access to capital needed to continue running the business. Furthermore, the company’s UK division alone was reported to owe almost £300 million to creditors. Add to this the fact that sales had been slowing for a while across 2023 (particularly in light of increased competition from rivals like Lush), and the problems had clearly started to form a vicious cycle for the retailer. 

As part of the insolvency proceedings, FRP Advisory were appointed to manage the process, and elite US law firm Jones Day have since been involved on the legal side. There was initially an attempt to pursue a CVA (company voluntary arrangement), though this quickly fell apart, and instead the administrators have decided to look for bidders. In the latest development this past week, FRP have set a deadline of Tuesday 11th June for bidders to come forwards with an offer.

Where can aspiring lawyers discuss this story?

This story can be discussed in a number of settings. As an upcoming solicitor, discussing various perspectives on this story can be a useful point to include on both your application forms and within interviews for opportunities like vacation schemes and training contracts. Budding barristers can similarly discuss this story as part of their application process for pupillages.


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What practice areas are worth relating this story to?

If you are looking to discuss this story as part of your applications, it is useful to consider how it can be linked to other points. An easy way to get started here for aspiring solicitors is to think about the practice areas which are common to the kind of law firms you will be applying for, and how they relate here.

First, there are obviously general themes of corporate law at play here. In order to understand the build-up to the administration announcement, note how we have traced the challenges which a large business like The Body Shop faces over its lifespan, and think about how lawyers advising corporate clients need to be attuned to these issues. You might also want to think about how ESG interacts with the business side of things, here. To what extent did the multinational corporate takeover of The Body Shop hurt its image (and therefore profits) from a PR perspective? Top lawyers are able to consider such perspectives alongside their more strictly ‘legal’ work.

Second, the more specific area of insolvency and restructuring is clearly present here. This is a massive practice area for many City law firms in particular and, given the fact that it was announced just a few months ago that UK company insolvencies have reached record levels, it is a practice area which is likely to draw even more work in the future. You can pick up a great deal of general business knowledge in this area by engaging with widely accessible resources like Investopedia or newspapers like the Financial Times or Economist – but if you have started studying a law degree (or a conversion course), you may well have studied Company Law from a legal perspective too, which often includes useful content regarding the insolvency process. 

Which kind of employer will want to hear about this story?

This story fundamentally takes a level of commercial awareness to understand. This is a skill which law firms and chambers are always looking for their applicants to showcase and develop further (by reading stories like these and researching around them in order to understand how the corporate world works). 

While all organisations would be pleased to hear about your commercial awareness, this is particularly important if you are applying to names which primarily do large-scale corporate work. For solicitors, then, think Magic Circle firms like Clifford Chance (ranked Band 1 by Chambers for their insolvency and restructuring work), or elite US firms like Kirkland & Ellis (again ranked on the same level). Tailoring your commercial awareness discussions to the target organisation is crucial in order to maximise your odds of success.


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