Body Central prepares to enter bankruptcy

The Florida-based company is reportedly working with the accounting and consulting firm Richter to prepare to enter bankruptcy. Body Central, which said earlier this week that it was facing “significant liquidity challenges,” received a notice of default on 18 million dollars in debt and is assessing strategic alternatives.

The retailer is in talks to procure additional financing, which could help with a reorganization after bankruptcy, Bloomberg reported, citing another person familiar with the matter. It is worthy a note that the company ceased trading on the Nasdaq in July last year.

Body Central, which was founded in 1972, operates stores under the Body Central and Body Shop banners and caters to women in their late teens and twenties.

Body Central working with advisers to assess financial and strategic options

Body Central said it is working with advisers to assess its financial and strategic options, which could include filing for Chapter 11 bankruptcy. The news sent Body Central stock tumbling, with its shares traded at 35 cents late in the session that day.

As Bloomberg reminded, as opposed to this year's dive, the stock jumped 97 percent last year.

Ten years ago, the fashion retailer was enjoying revenue growth of more than 20 percent a year, and until 2013 it was sticking to an ambitious expansion plan.

“While the company has made significant reductions in expenses and reduced excess inventory levels, our top line remains challenged by both the overall market environment and the transition time required to complete the merchandise transformation that began in the latter half of 2014,” President and CEO Ben Rosenfeld said in a statement. “The management team and board, along with its advisers, will continue to evaluate all available alternatives that may be appropriate for the business."

Body Central said it received notice of default January, 6 on 18 million dollars in company notes that were issued in June. Any default could result in a default under the company's senior credit facility, the retailer said in a note.

“The occurrence of any such events of default under the notes and the senior credit facility would permit the lenders thereunder to declare all amounts outstanding thereunder to become immediately due and payable and to exercise other remedies set forth in the applicable debt documents, including increasing the interest rates to the default rates of interest,” Body Central concluded.