French fashion chain Camaieu's bankruptcy declared by the Lille court on Wednesday and the subsequent closure of all its shops on Saturday have left exporters in Bangladesh worried about the recovery of their outstanding payments from the debt-ridden retailer.
The clothing retailer was declared bankrupt two months after being granted a moratorium. That moratorium has now been converted into a judicial liquidation, reports 7sur7 – a leading French-speaking news website in Belgium. All assets are being liquidated to (partially) pay off the mountain of debt of now 240 million euros, it added.
According to BGMEA sources, Camaieu has had about $300 million in annual business with Bangladeshi apparel exporters. The sources, however, said they have no idea about how many companies have got how much money stuck with the French buyer.
They also warned the closure of Camaieu, a major buyer in the French clothing market where Bangladesh's annual exports currently stand at about $2 billion, will affect the country's overall export growth at least to some extent.
This comes as a shock, especially at a time when the export sector is going through hard times because of the economic slowdown in some key export destinations including the EU in the wake of the Russia-Ukraine war, they said.
BGMEA Vice-President Shahidullah Azim termed Camaieu getting bankrupt as "a matter of great concern" and said that the BGMEA will ask all its members to provide information about their outstanding payments.
"We will use all possible tools to realise the dues," he added.
Industry insiders said a number of buyers including fashion retailers JCPenney and Sears based in the United States, and fast-fashion retail chain Peacocks and department store chain Debenhams based in the United Kingdom went bankrupt in recent years, causing about $500 of Bangladeshi apparel exporters' to get stuck.
The affected exporters are making efforts to recover the outstanding payments through both legal battles as well as business-to-business (B2B) and government-to-government (G2G) negotiations, they added.
Windy Group has $8.4m in dues
Meanwhile, The Business Standard has found out that a garment exporter named Windy Group has about $8.4 million in outstanding payments from Camaieu.
Asked, Windy Group Managing Director Mesbah Uddin Khan told TBS, "We have no idea how the company could do this! While dealing with us, the company was talking about expanding its business."
He further said that Camaieu had scheduled a meeting with his company for this Monday to discuss the "new business".
"But suddenly, an official of the sourcing department of the company sent an email mentioning that on 28 September 2022, the commercial court took the decision to act at the end of Camaieu with a judicial liquidation. They consider that the continuation plan and finances are not sufficient to continue the activities of Camaieu," Mesbah told TBS.
The email from the Camaieu official was quoted as saying, "Today is my last day at work. It's with huge emotions that I am writing you this mail. I am so sorry about this decision also for you as I know this decision will also affect you and your company."
Mesbah Uddin told TBS that the closure of Camaieu has pushed his company into a big uncertainty as they have already made about half of the products the French brand ordered under a $8.4 billion export deal while the rest of the goods are at the manufacturing stage.
"This is a big amount of money for my company that employs about 12,500 people," he said.
Windy Group has already requested the BGMEA to write to the France Embassy in Bangladesh and Bangladesh Embassy in France to realise its dues with Camaieu.
The Covid effect
Rezwan Selim, managing director of Softex Sweater Industries Pvt Ltd, told TBS that they once had good business relations with Camaieu.
"But, during the Covid period, we saw that its business approaches were not as usual. Finally, we cut all business relations with Camaieu and assigned a debt management company to realise our outstanding payments. And the French buyer deposited the money within a week." Said Rezwan Selim, also a former director of the BGMEA.
One-page business plan
Camaïeu made a relaunch in 2020 and was then taken over by real estate group La Financière immobilière bordelaise (FIB), but the Covid pandemic has weighed heavily on the already weak retailer.
There were immediate doubts about the takeover.
"The takeover plan was not very well thought out, with a business plan that fits on one page. I am not in a position to provide more than 70 million in state effort," French industry minister Roland Lescure now says.
To avoid liquidation, the owner said 79.2 million euros were needed over the next eight months to pay for the autumn-winter collection and purchase the spring collection, among other things.
The shareholder said Wednesday morning it still wanted to inject more money itself, on the condition that the state would cough up an advance of 48 million euros. But the French government deemed that unrealistic.