A group of Bangladeshi readymade garment exporters on Saturday threatened to file a lawsuit against Expo Freight Limited (EFL) if the company fails to pay $10.21 million in outstanding arrears to local suppliers within the next 15 days.

EFL is legally obligated to pay the arrears to local suppliers, as they handled the goods supplied to the now-bankrupt British retailer Debenhams, the Debenhams Vendors Community convener Md Zahangir Alam said at a press conference held at the Economic Reporters’ Forum in Dhaka.

Around 36 manufacturers supplied ready-made garments 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 these terms for over a decade. However, on April 9, 2020, Debenhams entered liquidation, appointing an administrator to manage the process.

Zahangir said that EFL and its carriers delivered goods to Debenhams without the necessary bank endorsement, violating Bangladesh Bank’s Foreign Exchange Policy.

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, he 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, also the managing director of Design and Source, explained that local suppliers delivered garments valued at $70 million to Debenhams prior to the retailer’s bankruptcy, which was significantly affected by the COVID-19 pandemic. Of this amount, nearly $60 million has been received over the past four years, leaving $10 million still outstanding.

He noted that many of the 36 suppliers, whose total export value exceeds $5 billion annually, are small and medium-sized enterprises that 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. 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,’ Zahangir stated.

Currently, many factories are struggling to meet payroll obligations, leading to worker unrest, he said.

Zahangir urged Bangladesh Bank and the National Board of Revenue to intervene, saying that if payments are not received within 15 days, factories will be unable to pay their workers, potentially resulting in protests, including blockades at EFL’s office.

The vendors emphasised the urgency of the situation, asserting that any further delays are untenable.