(Toronto) The head of The Body Shop Canada says he is seeking court protection from his creditors because the parent company deprived its Canadian subsidiary of its liquidity and forced it into debt.
Jordan Searle claims in an affidavit that the company’s situation “deteriorated significantly” in December, after the parent company, The Body Shop International, was bought by private equity firm Aurelius.
The general manager of the Canadian subsidiary of the international cosmetics brand “Body Shop” found that the parent company continued to take his money, but did not pay suppliers, because The Body Shop International claimed to have lost access to its financing and slowed down payments to creditors to conserve liquidity.
Mr. Searle says The Body Shop Canada was accustomed to having its parent company take money from its account, because the two entities had a joint treasury agreement, which provided for The Body Shop International to take the revenue from its Canadian subsidiary and paid its expenses.
When The Body Shop International filed for some form of creditor protection last month in the United Kingdom, Mr. Searle said The Body Shop Canada was $3.3 million in debt and no prospect of help from its owners.
Lawyers for The Body Shop International and Aurelius did not respond to requests for comment on Mr. Searle’s affidavit, filed days after The Body Shop Canada announced plans to close 33 of its 105 stores in the country.