(Toronto) An Ontario judge has authorized a sale process that could allow The Body Shop Canada to find new owners.
In a virtual court hearing on Friday, Mr Justice Peter Osborne approved an application by the struggling retailer to be allowed to engage with potential buyers who could keep the business afloat.
The application stated that there were “no viable alternatives” other than a sale to keep the company afloat.
The approval marks a new chapter in the cosmetics retailer’s fight for survival, which began earlier this year when its parent company, a European private equity firm, starved it of cash and pushed it into debt, forcing it to close 33 stores and lay off about 200 workers.
The arrangement and a separate creditor protection process undertaken by the parent company have left The Body Shop Canada scrambling to source inventory and find a path forward.
In April, Jordan Searle, the retailer’s Canadian chief, testified under oath that he had seen a “sufficient level of interest” in the company to believe a sale was possible.
Mr. Searle did not specify who was interested in buying the company, which has been in Canada since 1980.
PHOTO ANDRÉ TREMBLAY, LA PRESSE ARCHIVES
The company has existed in Canada since 1980.
The chain’s lawyers also did not disclose potential names Friday, but said 12 parties had come forward to buy the brand with some “overlap” between British bidders and those open to a Canadian purchase.
Any deal reached will depend on the cooperation of the parent company, because the British firm oversees the chain’s licensing and has long managed the finances and inventory of its international divisions, Natalie Renner, a lawyer for The Body Shop Canada, told the court.
It is possible the British company may want to sign franchise or licensing agreements with entities in Canada, she added, but she was unsure which route the parent company would take, as the business is also up for sale.
Mme Renner, however, has learned from the parent company’s lawyers that its own sale process is “well underway” and could be completed soon.
When it comes time to analyze offers for the Canadian company, one lawyer said The Body Shop might not have much leverage.
“Frankly, the company is not in a great negotiating position,” David Bish, lawyer for Cadillac Fairview, one of The Body Shop Canada’s property owners, told the court Friday.
He explained that if a bidder offers $1 million for the Canadian company but the British parent company only cooperates with another offering $1, the Canadian arm might have to accept the lower offer.
Even though management has done a “good job” of keeping the business a going concern and his client does not object to a sale process, Mr.e Bish said he has long viewed The Body Shop Canada’s recent proceedings as “existential.”