New Edinburgh owners to carry out businesses with Bangladeshi suppliers

Edinburgh Woollen Mill (EWM) Group Chairman John Herring said its new owners will buy stock that is sitting in Bangladeshi factories as the domestic apparel makers' association wrote to the group seeking the outstanding dues to be cleared.

"The new owners are happy to take the stock that sits in Bangladesh factories that is finished and ready to ship. We are also of the understanding that they have credit facilities in place, ready to transact," Herring replied to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on 12 May.

The Business Standard has obtained a copy of the reply. Contacted, newly elected BGMEA President Faruque Hassan said he was optimistic about the EWM reply.

Last year, the EWM Group's businesses including Peacocks, Jaeger, Bonmarche, and Edinburgh Woollen Mill went bankrupt. The brands were later purchased by an anonymous international investment consortium led by Edinburgh Woollen Mill's Chief Operating Officer Steve Simpson.

Edinburgh Woollen Mills and its subsidiary brands owe about £27 million to Bangladeshi apparel suppliers.

On 11 May, the BGMEA wrote to the EWM Group to ask for money owed for clothing goods cancelled in March 2020.

In the letter, BGMEA President Faruque Hassan said outstanding bills owed by EWM have remained unsettled for more than a year in cases of some suppliers.

"We do not have any record that our members received any payment for the goods released by you last year," Faruque said. The BGMEA letter also asked for the goods sitting in its members' factories to be collected.

"We strongly urge you to immediately settle the dues of the aforementioned goods in compliance with the central bank law," he added.

The collapse of the EWM brands turned Bangladeshi suppliers into unsecured creditors to be dealt with by the administrators – UK-based FRP Advisory and global audit network RSM.

Chattogram Export Processing Zone (EPZ) based jeans maker Denim Expert Ltd was one of the Peacocks' suppliers in Bangladesh. Peacocks cancelled 43,600 pieces of jeans orders of the Denim Expert, worth over $2,26,180.

Mostafiz Uddin, managing director of Denim Expert Ltd, said, "The order cancellation dealt a mighty blow to my business. Some other manufacturers also suffered due to the order cancellation."

Mostafiz said he contacted the UK lawmakers and the European Commission to change the bankruptcy laws so that the errant brands cannot wipe out the debts to factories and return to business with a new name.

"We have to put concerted efforts to tame such unethical purchasing practices that are strangling the manufacturers," said Mostafiz Uddin, who is also founder and CEO of Bangladesh Apparel Exchange.

Like Mostafiz's Denim Expert Ltd, another Bangladeshi garment exporter KL Design claimed a due payment of $438,151 to Peacocks for shipped goods last June.

In the latest reply to the BGMEA, EWM Group Chairman Herring asked Bangladeshi suppliers to contact administrators directly to determine claims for any invoices that had not been settled by the companies.