A total of 36 local ready-made garment (RMG) exporters on Saturday threatened to take legal action against Expo Freight Limited (EFL),
which allegedly will fail to pay
$10.21 million in arrears within the next 15 days.
EFL is legally responsible to pay the arrears to local suppliers, as it handled the goods supplied to the now-bankrupted British retailer Debenhams, Md Zahangir Alam, the Debenhams Vendors Community convener, said.
He was speaking at a press conference held at the Economic Reporters' Forum in the city.
Around 36 local RMG exporters supplied apparel items to Debenhams PLC, a reputable UK-based company with a 150-year history, under contracts that required them to submit the bill of lading to EFL for payment upon receiving export proceeds.
They have adhered to the terms for over a decade, he said adding that on 9 April, 2020, Debenhams entered liquidation, appointing an administrator to manage the process.
EFL and its carriers delivered goods to Debenhams without the necessary bank endorsement, violating Bangladesh Bank's (BB) Foreign Exchange Policy, he alleged.
The vendors subsequently issued legal notices to EFL, Debenhams' nominated forwarder and their carriers-including Maersk Line, Hapag-Lloyd, GBX, BLPL, TPL, and Sky Ways Limited-seeking payment, Zahangir Alam said.
After these notices, Maersk Line and EFL engaged with the Debenhams Vendors Community and agreed to pay 70 per cent of the FOB values for the goods transported by Maersk Line.
Zahangir Alam, also the managing director of Design and Source, explained that local suppliers delivered garments worth US$70.48 million to Debenhams prior to the retailer's bankruptcy, which was significantly affected by the COVID-19 pandemic.
Out of the total amount, the vendors received about US$60 million over the past four years and the rest about US$10 million still remain outstanding, he added.
He noted that many of the 36 suppliers, whose total export value exceeds $5 billion annually, are small and medium-sized enterprises and they lack the financial resilience to absorb these losses.
"As a result of multiple extensions from Bangladesh Bank, all back-to-back LCs have matured, and some authorised dealer banks have resorted to forced loans to pay suppliers," he said.
Furthermore, banks have halted the opening of new back-to-back LCs, depriving factories of essential facilities such as Export Development Fund benefits and cash incentives due to overdue payments, he noted.
"We are now at the verge of closing the factories. Most of the factories are now struggling for survival and can't make the workers payment," he added.
He sought intervention from the BB and the National Board of Revenue (NBR) saying that if payments are not received within 15 days, factories will be unable to pay their workers, which might potentially result in protests including blockades at EFL's office.
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