The Body Shop files for bankruptcy in Canada and US as funds dry up

The Body Shop has filed for bankruptcy in the US and Canada and is struggling to pay suppliers in Australia as the group's most profitable overseas businesses struggle with cash shortages after its UK parent's collapse last month.

- Sarah Bulter

The US arm of the ethical cosmetics group has ceased trading at its 50 outlets. On Saturday, it filed for Chapter 7 insolvency, under which assets are sold off to clear debts, putting about 400 jobs at risk including those in a distribution centre that still holds millions of dollars' worth of stock.

In Canada, 33 of the 105 shops have closed, with the loss of more than 200 jobs.

In Australia, where the group operates almost 100 stores, as well as being responsible for more than 20 in New Zealand, it is understood that the future of the chain is hanging in the balance as it struggles to cover large debts after its access to funds was cut off.

Sources said the profitable business could cover day-to-day expenses from cashflow but would need funds to cover debts to suppliers such as logistics firms, warehouses and marketing agencies for services during its busy Christmas season.