Edinburgh Woollen Mill (EWM) Group is considering launching legal action against the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), accusing it of jeopardising the future of its business.
EWM Group chairman John Herring in a letter sent to the BGMEA chair Dr Rubana Huq last month has said the claims are now jeopardising the business.
The company - owned by billionaire businessman Philip Day - is disputing claims of owing manufacturers £27m in unpaid bills, reports inews.
The company has told the BGMEA that these "old figures are completely baseless and without any merit."
Claims spook credit insurers
EWM Group Chairman Herring has asked for urgent clarification from the BGMEA, but has not yet received a response.
These reports of unpaid bills has reportedly spooked EWM's credit insurers – who provide cover for suppliers should a company be unable to pay its bills – making it more difficult for new suppliers to get coverage.
Legal action being considered
The company's board according to inews will meet tomorrow to discuss whether to launch legal action against the BGMEA over its claims.
The BGMEA first said the group owed the money in May, and the £27m figure has since been cited in more recent media reports.
EWM said at the time that it did not recognise the figure and in the last few weeks clarified that its debts have now been paid off.
The company released a statement in late September saying: "To the best of our knowledge, all outstanding amounts that were owed to suppliers in Bangladesh have been settled or agreed."
A source close to the matter called the BGMEA's claims "completely reckless"
Coronavirus rocks the high street
EWM Group, which also owns brands such as Peacocks and Jaeger and employs 24,000 people, is one of several British retailers which found itself locking horns with the BGMEA in recent months, as initial coronavirus lockdowns caused several high street shops to cancel orders or renegotiate terms with suppliers.
In May, EWM hit back at the BGMEA after the company was told not to ask for discounts from garment-makers, calling the organisation's approach "unproductive and uncollaborative".
Asda and Sir Philip Green's Arcadia were also named as businesses asking for discounts earlier in the pandemic. In April, Primark agreed to pay almost £400m to its suppliers to cover stock made before mid-April after being criticised for initially withholding payment.
The spat comes amid rumoured interest from potential buyers in parts of EWM's business, with advisers brought in last month to value its Peacocks chain following an unsolicited approach.