The Body Shop administrators have been working on a deal to cut its tax bill in order to boost cash for creditors facing losses following its collapse.
The administrators have drawn up proposals to retain £66m worth of tax benefits racked up before it fell into insolvency, as they seek creditors’ approval over a restructuring agreement.
The creditors will benefit from a proposal to protect tax losses, which may be used to lower corporation tax due in the future, if The Body Shop can be rescued and continue solvent training.
Sources claimed creditors would be likely to secure a dividend which reflected the value of the tax asset if they voted for a company voluntary arrangement, according to The Times.
It is believed the ethical health and beauty retailer’s planned CVA will not result in meaningful rent cuts for landlords.
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The proposed deal would allow the retailer’s private equity owner Aurelius to give back more cash to creditors as a dividend when The Body Shop leaves administration.
Aurelius has drawn up the plans with restructuring advisers from FRP Advisory, ahead of a meeting held to answer questions from creditors and vote on the proposal.
Earlier this month, administrators of The Body Shop prepared to launch a further restructuring process as it sought to salvage the future of the ethical beauty brand.
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