'The suppliers were obviously thrilled that we got them a significant return,' says the attorney representing them
A group of Bangladeshi garment suppliers, who were severely hit by the pandemic and unethical business practices of Western clothing giants, have secured a rare victory in a $40 million lawsuit against US clothing giant Sears.
According to a report published by Forbes on Saturday, Joseph E Sarachek, the attorney who represented 21 Bangladeshi factories in the lawsuit filed against Sears last June, said the crumbling retailer left its manufacturers with stacks of its clothing and unpaid bills last spring and has stiffed them multiple times before as started its bankruptcy proceedings.
Following the victory in the case, Sarachek confirmed that his clients had received the bulk of their money back in a settlement with Transformco, the privately-held company set up by American billionaire Edward Lampert’s ESL Investments hedge fund to acquire Sears and Kmart out of bankruptcy last year.
“The suppliers were obviously thrilled that we got them a significant return,” says the attorney in the report.
Sears pushed suppliers to a breaking point after the company went through bankruptcy and factories were left without payment on completed inventory multiple times.
The Bangladeshi suppliers who filed suit over the cancelled orders, some of whom were owed as much as $6 million apiece for clothing they had already sewn and shipped for Sears last spring, received initial payments from the settlement last September and are continuing to receive payouts, helping them avoid certain financial disaster, the report added.
The cancellations “contributed to an evolving humanitarian disaster in Bangladesh and elsewhere in Asia,” according to lawyers representing factory owners.
Last spring, when the pandemic hit, scores of major brands and retailers, including Forever 21, Ross Dress for Less, The Children’s Place, Kohl’s, Global Brands Group and Arcadia (owners of Topshop), refused payment to factories worldwide on $40 billion worth of completed goods, leaving factories facing down bankruptcy and pushing garment workers out onto the street without pay in some instances, says the report.
While over two-dozen large brands, including H&M, PVH PVH, VF Corporation VFC, Zara, and C&A, reinstated and paid for orders after international pressure last year, a staggering $20 billion worth of goods manufactured before the pandemic have not yet been paid on.