Newtimes Development Ltd, a Hong Kong-based apparel buying agent, has sought Bangladesh government's intervention to resolve trade dispute between a local garment factory and a US buyer over the latter's non-payment and bankruptcy, officials said.
The US brand Coldwater last year placed a work order worth US$1.15 million to the local garment factory Croydon Kowloon Designs Ltd (CKDL) located in Savar EPZ, they said.
The brand paid only US$454,000 to CKDL against shipments and $698,000 remained pending, they said.
Newtimes, an agent of Coldwater, also works for other brands like Polo Ralf Lauren and American Eagle. The buying agent has a local office in Bangladesh for more than a decade.
Due to adverse effects of the Covid-19 pandemic, Coldwater filed a plea for bankruptcy and liquidation in US and the court directed the sale of the company assets through auction, the officials said.
CKDL communicated with the brand for the remaining amount as per purchase orders, but Coldwater responded that they have no fund and advised them to follow the US law to claim their money, they said.
CKDL then pursued legal action through a civil money suit and a criminal case against Newtimes Development Ltd through a Bangladesh court, they added.
Newtimes liaison office in Bangladesh in a letter, dated November 16, to Commerce Minister Tipu Munshi alleged that CKDL has adopted a wrongful approach including police harassment and intimidation against the company instead of international trade negotiations.
"These kinds of wrongful actions would set a bad precedence for [the] future where such genuine cases of bankruptcy and liquidation would be dealt with in such [an] unfair manner where the agent is held liable for payment rather than the actual buyer whom goods were directly sold to," the letter, signed by Newtimes Bangladesh country manager Kaizad Mistry, reads.
Due to the Covid-19 pandemic globally, such cases have become frequent and these kinds of issues need to be dealt with in accordance with the US law, it adds.
The dispute is purely between CKDL and Coldwater and it derives from sales of garments under specific purchase order, the letter says, terming it an 'international trade issue' relating to a cross-border transaction wherein Newtimes is merely a buying agent 'with no responsibility of paying sales value to the supplier (CKDL) on behalf of the buyer Coldwater'.
Citing the purchase order, the buying agency agreement (between Coldwater and Newtimes) and the LoU (Letter of Undertaking) signed by CKDL, the letter says CKDL has accepted TT 60 day-open payment terms with Coldwater and has invoiced and consigned goods directly to Coldwater.
"It is [a] very clear case that the transaction was between CKDL and Coldwater and the claim of money by CKDL to Newtimes is wrongful and not as per trade laws," it adds.
Talking to the FE, Mr Mistry said even after several times of reminding and communicating with them, CKDL refused to file their legal claim for the money, which is binding by US trade law.
Newtimes sent a legal notice to Coldwater demanding payments of all outstanding dues, and all legal fees on behalf of all the factories, the letter signed by him notes.
Still, CKDL decided to pursue legal action via a civil money suit and a criminal case against Newtimes through the Bangladesh court, the letter says, adding, "This does not fall in line with the way the due process works in such cases of the international trade law."
As a means of harassment and intimidation by CKDL, a PBI (police bureau of investigation) notice that contains names of several of its managers and employees was sent to Newtimes Bangladesh office, the letter adds.
The buying agent Newtimes requested the commerce minister to intervene and amicably close this matter urgently, saying "This is of utmost importance for the apparel export business and trade relationships between the two countries and for the local apparel industry as well."
When asked, Mishal Ali, managing director of CKDL, rejected the allegation of harassment and intimidation against Newtimes, saying they are rather being cheated and so taking legal action.
Newtimes did not give any assurance of the remaining payment though they asked for money for claiming CKDL's pending amount, he said.
He further claimed that though the company has acquired Coldwater, it is not taking responsibility for payment and created confusion hiding this information.
Responding to the acquisition, Mr Mistry said they have provided all relevant information to PBI.