News / Forwarders on the hook for millions following Debenhams collapse

Garment factories are demanding millions of dollars from a forwarder, following the collapse of the UK’s Debenhams chain in 2020.

Bangladeshi garment exporters are looking for legal avenues to reclaim the debt from Debenham’s local freight forwarder, Expo Freight, as factory workers have not been paid.

Debenhams filed for bankruptcy in April 2020 owing some $70.48m to 36 Bangladeshi suppliers. Although some $60m has now been recovered, garment shippers are demanding logistics companies, including Maersk and Hapag-Lloyd, facilitate the remainder of the payment.

Other carriers cited include container company BLPL, and forwarders TPL, GBX, and Sky Ways.

The garment factory contracts with Debenhams agreed that the retailer would send money via its nominated forwarder. However, as Debenhams’ fortunes waned, it received the goods, but did not pay the money, leaving the responsibility with the forwarder. Under the deal, the carriers are expected to mediate in any dispute or facilitate payment.

Unpaid Bangladeshi suppliers issued a legal notice to Expo Freight in April, 2024. But according to Md Zahangir Alam, convener of the Debenhams Vendors Community (DVC) at a press meeting in Dhaka on Saturday, Expo failed to respond.

Mr Alam claimed that neither the carriers, Expo, or Debenhams have responded to their demand for the remaining $10.21m.

“Most of the Debenhams suppliers are now fighting to survive,” said Mr Alam.

“We are unable to pay wages in time now. Most of these factories will be closed unless we can get the money back in a fortnight, and hundreds of workers will lose their jobs if the factories are closed down.”

The Debenhams Vendors Community said that unless the money was paid in 15 days, it would protest outside the Expo office in Dhaka, as well as taking legal action against Expo and the carriers.

Expo Freight, one of the top freight forwarding agencies in Bangladesh with some 10% market share, denied the claim.

Mahbub Sarker, head of finance & accounts, said: “We don’t think the figure mentioned is correct. These deliveries were made in 2020, thus we have no idea how much the suppliers could recover from the buyer.

“We have no idea under what conditions they did business with Debenhams. Maybe there are some inconsistencies in this case. We follow Bangladesh government rules.

“In the past we assisted these factories to get payment and we will work together to recover the remainder, if any.”

The first $60m was recovered after Maersk and Expo agreed to pay 70%  of the FOB price of goods carried by Maersk.