Retail chain Body Central to close 265 stores, fire 2,500 workers

By Lauren Coleman-Lochner

Bloomberg News

Body Central, the beleaguered women’s clothing chain, has closed all 265 of its stores and fired 2,500 employees as it wound down the business through a state process instead of a typical federal bankruptcy.

Stores ran sales through the weekend and closed Sunday night, said Gardner Davis, a lawyer at Foley & Lardner who represents the retailer.

Body Central, based in Jacksonville, Fla., said earlier that it would embark on the state process, known as an assignment for the benefit of creditors.

In a separate filing, it said lender Crystal Financial terminated its $17 million credit line, leaving Body Central without a source of revolving debt.

“The company wanted to reorganize as a smaller chain, but it was unable to raise the financing necessary,” Davis said in an interview. “This is a tragic development. The company’s 2,500 loyal, hardworking employees are going to lose their jobs immediately.”

The company had been working on a federal bankruptcy filing with Richter, an accounting and consulting firm, people familiar with the situation said last week. The board and a majority of investors ultimately opted for the state process, known as an ABC.

This process is “less expensive, faster and more flexible,” Davis said. “The only people who lose out on an ABC are the lawyers.”

You don’t normally see this approach with public companies because it requires majority approval from shareholders, which Body Central was able to obtain.