Reveal to taxpayers the true cost of Body Shop collapse, urge MPS

‘The Body Shop looks like it’s being crashed while the taxpayer picks up a big bill for redundancy payments’

TAXPAYERS must be told about the true cost of the collapse of The Body Shop, MPS have urged the insolvency watchdog.

In a letter to the Insolvency Service, Liam Byrne, the chairman of the business and trade committee, demanded answers over the collapsed retailer’s redundancy bill and how many workers are eligible for payments.

Mr Byrne also asked Dean Beale, chief executive of the regulator, whether administrators at FRP, which took over the UK arm of The Body Shop in February, are “under investigation for any alleged breaches of the redundancy process”. It comes after The Telegraph revealed last month that taxpayers will have to shoulder the redundancy costs of hundreds of sacked employees.

About 500 roles have been axed since The Body Shop’s failure, with affected workers being told to make claims through the government-backed redundancy payments service. This is funded using National Insurance contributions. Mr Byrne has raised questions over why some employees were only notified of their sacking at a “moment’s notice”. The Insolvency Service has until March 23 to respond to questions from Mr Byrne, who has said that The Body Shop is part of a broader investigation into private equity’s impact on the retail industry.

Earlier this month, Mr Byrne told The Telegraph: “The Body Shop was a trailblazer for ethical enterprise and it now looks like it’s being crashed while the taxpayer picks up a big bill for redundancy payments.” The Body Shop collapsed into administration in February, leading to swathes of job losses and store closures.

FRP was drafted in to oversee the process, three months after the retail chain was acquired for £207m by German

buyout specialist Aurelius. It emerged earlier this month that FRP is investigating claims that millions of pounds were taken out of the business before the company’s sale to Aurelius.

This has fuelled scrutiny about the collapse of the company, which posted a £60m loss in 2022.

It is understood that after completing the acquisition in January, Aurelius discovered that The Body Shop’s finances were allegedly in a worse state than expected, which triggered internal discussions over the company’s due diligence. However, Aurelius emerged as the retailer’s top creditor before its insolvency and is understood to be in pole position to reclaim The Body Shop’s assets, shorn of debt, if no bidder materialises. It will not be responsible for redundancy payments.

An FRP spokesman said: “In normal circumstances, an employer proposing to make redundancies would embark on a period of consultation with its employees; this is rarely possible in insolvency where the options available are limited.”