Kathmandu, Jul 11 (UNI) The bankruptcy of American apparel buyer giant Stephen Berry has put four major Nepali garment exporters at risk of losing four million dollars and face a possible closedown, media reports said here today.
Omi Apparel, Amardeep Garment, Binita Fashion and Destination Apparels plunged deep into trouble after Stephen Berry sought protection under US Chapter 11 bankruptcy law, that gives troubled firms more time to reorganise debt obligations, reports said.
''Though the door to receipt of payments due has not been completely closed, there will certainly be delay in payment and that will land the industry in trouble,'' the paper quoted Prashanta Pokharel, owner of Omi Apparel, as saying.
The buyer has declared that bankruptcy exporters will lose at least a chunk of the payments due. Stephen Berry, known for dealing in cheap labels in the US, has been importing a substantial volume of garments from Nepal over the last half decade.
In the latest deal, it placed orders worth 5.25 million dollars with the four Nepali manufacturers in January. Of that, the exporters said they have received payment of only 400,000 dollars.
While they are yet to dispatch last consignments worth 850,000 dollars, they are also supposed to have received payment of four million dollars for consignments already dispatched.
According to exporters, the Stephen Berry bankruptcy is bad news for the four exporters and for the Nepali garment industry as a whole. As chances of the US economy going into recession are heightening, exporters warned that more of such cases can surface in the days to come.
Delay in payment, which they said is the best case scenario in the Stephen Berry deal, would still affect timely release of bank guarantees, freeze assets, subject them to fines and affect future operations, unless the banks came to the rescue.
''If the court refuses Stephen Berry's appeal, the company will have to go into liquidation, which will be a disaster for Nepali manufacturers,'' said an official at the Garment Association of Nepal, requesting not to be named.
Nepal's garment industry, which had investment of Rs 9 billion and had over 200 players in 2001, currently comprises just a dozen companies because of eroding competitiveness and internal problems.
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