Body Shop New Zealand Limited
[2025] NZHC 48
•3 February 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-000182
[2025] NZHC 48
UNDER Part 15A of the Companies Act 1993 IN THE MATTER OF
THE BODY SHOP NEW ZEALAND LIMITED
(Administrators Appointed)
AND
an application by DANIEL STONEMAN and NEALE JACKSON
Applicants
Judgment
(on the papers):
3 February 2025
JUDGMENT OF ROBINSON J
[Application under s 239Y(4) of Companies Act 1993]
This judgment was delivered by me on 3 February 2025 at 10:30 am pursuant to Rule 11.5
of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Chapman Tripp, Auckland
RE THE BODY SHOP NEW ZEALAND LIMITED [2025] NZHC 48 [3 FEBRUARY 2025]
[1] On 22 January 2025 the applicants were appointed administrators of The Body Shop New Zealand Limited (in administration) (Body Shop). On 29 January 2025 the administrators applied for orders:
(a)that this application be dealt with on a without notice basis;
(b)pursuant to s 239Y(4) of the Companies Act 1993 (Act) extending the 14-day period within which the applicants are required under s 239Y of the Act to give notice of the termination of a contract of employment from 5 February 2024 to the date of the watershed meeting, with any wages or salary that accrue under such contracts being an expense of the administration under Schedule 7, cl 1(1)(b) of the Act; and
(c)incidental to the extension of the period under s 239Y(3), including as to service of any orders.
[2] One of the administrators, Daniel Stoneman, has affirmed an affidavit in support of the application.
Background
[3] Body Shop is a cosmetic and health and beauty retailer. It operates 16 physical stores in seven cities across New Zealand: Auckland, Hamilton, Tauranga, Palmerston North, Wellington (including Porirua and Lower Hutt), Nelson and Christchurch. It also operates an online store.
[4] Body Shop employees 146 staff, 70 of whom are employed full time. The rest are on casual contracts.
[5] Body Shop’s parent company is a UK company named TBSI Realisations Limited (formerly named The Body Shop International Limited). TBSI Realisations Limited was placed into administration in February 2024. In September 2024, the administrators of TBSI Realisations Limited sold certain of its assets, but not Body Shop and its business.
[6] Body Shop’s director resolved to appoint administrators on the basis that the Body Shop is or may become insolvent. The administration is at a very early stage. The administrators are in the process of assessing Body Shop’s financial position. The first meeting of creditors is set to take place on Monday, 3 February 2025.
[7] Mr Stoneman explains that the administrators are working closely with Body Shop’s management team to maximise the value of its assets in order to achieve a better outcome for its creditors and its employees than would arise out of an immediate liquidation. Significant and urgent work is underway in pursuit of that strategy including:
(a)ensuring the ongoing operation of all stores in the immediate term while assessing the performance of each store;
(b)dealing with issues relating to the employment of the Body Shop’s employees;
(c)negotiating with landlords and suppliers in order to maintain the Body Shop’s ability to continue trading; and
(d)otherwise carrying out the various tasks required of the administrators under part 15A of the Act, in accordance with the relevant timeframes.
14-day period
[8] Under s 239Y of the Act, the administrators will become personally liable for the payment of wages and, salary accruing under pre-administration employment contracts unless they give notice of termination of those employment contracts within 14 days of their appointment. That 14-day period ends on 5 February 2025. The administrators apply under s 239Y(4) to extend that period to end on the date of the watershed meeting. As matters stand, that would be no later than 27 February 2025.1 Applications under s 239Y(4) to extend the 14-day period are not uncommon.2 The
1 Companies Act 1993, ss 239AT(2) and 239AV.
2 Re WGL Retail Holdings Limited [2011] NZCCLR 22; Re Postie Plus [2014] NZHC 1337; Re Kumfs Group Limited [2019] NZHC 2552; Re Wirecard NZ Limited [2020] NZHC 1804; Re Advanced Building and Construction Limited [2021] NZHC 937.
relevant legal principles are well established. The Court may consider factors which point to an administrator needing further time to properly assess the company’s situation so as to make an informed decision regarding employment,3 and allowing the administrators to continue a “business as usual approach”.4 Relevant factors include:
(a)the size and scope of the business;
(b)the nature and complexity of the administration;
(c)the time needed to execute an orderly process to dispose of assets; and
(d)whether there are a large number of employees with complex entitlements.
[9] Mr Stoneman explains that, given the other steps they are required to undertake in the administration, it is not practicable, before the end of 5 February 2025, for the administrators to:
(a)identify each of the 146 employees, and review and assess their employment contracts and other relevant documentation;
(b)conduct the necessary investigations required to make informed decisions about the continuation or termination of each of those employment contracts; and
(c)where necessary, issue termination notices.
[10] Mr Stoneman says that if the extension is not granted, the administrators anticipate they will be required to give notice terminating all employment contracts before 5 February 2025, with a view to re-employing some or all of those employees as would be required in order to allow ongoing trading. This would not be a straightforward process. It would give rise to significant legal and administration costs. Moreover, existing employees whose contracts are terminated may decline to
3 Re Advanced Building and Construction Limited, above n 2 at [16].
4 Re Ruapehu Alpine Lifts Ltd [2022] NZHC 2738 at [20].
be re-employed, even if they are offered a new contract at short notice. This would leave stores short-staffed, which would be disruptive to the ongoing operation of those stores and the efficient realisation of stock.
[11] In these circumstances I am satisfied it is appropriate to make the orders sought, extending the 14-day period under s 239Y(3) to the date of the watershed meeting. As noted, the convening period within which the administrators must convene the watershed meeting expires on 20 February 2025;5 so, the watershed meeting must be held no later than 27 February 2025.6 However, the administrators foreshadow the possibility of an application under s 239AT(3) of the Act to extend the convening period. As discussed briefly with counsel, any corresponding extension of the s 239Y(3) period beyond 27 February 2025 would require a further application, presumably to be considered in the context of any accompanying application under s 239AT(3). Applications under s 239AT(3) and s 239Y(4) are commonly made and considered together.7
Without notice
[12] The application has been commenced on a without notice basis. The relevant statutory time periods are short. In the circumstances I accept that to require service of the application on any interested parties, including employees, at this interim stage would cause unnecessary delay. I also note Mr Stoneman’s evidence that the administration received no objection in response to their letter to employees dated 24 January 2025 explaining that they intended making this application.
[13] In any event, I accept that Body Shop’s employees and any other interested parties will not suffer prejudice if service is dispensed with. They will be notified of the orders and they will have the right to apply to vary them.
[14] I also accept that it is appropriate that employees be notified of these orders by email, hand delivery or post.
5 Companies Act 1993, s 239AT(2).
6 Companies Act, s 239AV.
7 Re WGL Retail Holdings Limited; and the other authorities noted above, n 2.
Orders
[15]I order that:
(a)The applicants’ originating application for orders extending the period under s 239Y(3) of the Companies Act 1993 (Act) can be dealt with on a without notice basis.
(b)Pursuant to s 239Y(4) of the Act, the period of time during which the applicants are required under s 239Y(3) of the Act to give notice of the termination of a contract of employment is extended to the date of the watershed meeting, instead of 5 February 2025, with any wages or salary that accrue under such contracts being an expense of the administration under Schedule 7, cl 1(1)(b) of the Act.
(c)Within three working days of the date of these orders, the applicants shall give notice of the making of these orders to each known employee of The Body Shop New Zealand Limited (Administrators Appointed) (Body Shop), and notice of these orders will be served effectively on each known employee of Body Shop:
(i)email to those employees who have provided the applicants with an email address or for whom an email address has been identified by the applicants in the books and records of Body Shop; and
(ii)where an email address is not recorded in the books and records of Body Shop, either:
1. delivering the orders by hand to the applicable employee on site of a Body Shop store; or
2. sending by post the orders to the postal address of the applicable employee at such postal address as is recorded in the books and records of Body Shop.
(d)Leave to apply is granted to any person who can demonstrate a sufficient interest to modify or discharge the above orders up on appropriate notice being given to the applicant.
(e)Leave is reserved for the applicants to apply further in respect of any ancillary issues arising out of the orders made.
(f)The actual and reasonable costs of this application will be an expense incurred by the applicants in carrying out their duties as administrators of Body Shop.
Robinson J
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