Polish fashion retailer LPP has denied allegations that it owes outstanding payments to Bangladeshi garment exporters, rejecting claims of approximately US$40 million in unpaid dues while maintaining that it bears no responsibility for the disputed transactions.
In a response to The Business Standard, LPP stated that it continues to settle all obligations with its Bangladeshi suppliers on time and described reports of payment arrears as “entirely unfounded.”
However, the company did not comment on its recent decision to suspend sourcing from Bangladesh, a move that has created uncertainty among hundreds of local suppliers.
The dispute revolves around export orders placed by FES Retail, a Russian company. Bangladeshi exporters claim that LPP acted as the guarantor for these orders and the associated payments. According to exporters, payments for shipments made to FES Retail have remained outstanding for the past 18 months, with total dues estimated at US$40 million.
LPP rejected the allegation, stating that the disputed transactions involve a company that acquired its Russian subsidiary in 2022.
According to the retailer, it is not a party to the dispute and cannot be held responsible for liabilities incurred by the separate entity. LPP said any claims should be directed to the company legally responsible for the unpaid obligations.
The company also stated that it remains in regular communication with the Bangladesh Embassy in Warsaw to clarify the matter and address what it described as misinformation.
Bangladeshi exporters, however, strongly dispute LPP’s position.
Enamul Kabir, Managing Director of ENSA Clothing, said his company alone is awaiting US$51,000 for garments exported to the Russian buyer through LPP.
He claimed the company possesses documentation proving that LPP guaranteed payment for the shipments, noting that previous transactions were settled directly by LPP from Poland. According to him, exporters were informed only in July that LPP was no longer associated with the Russian business, despite years of business conducted under the same arrangement.
Several affected exporters have already filed lawsuits against LPP in Bangladeshi courts in an effort to recover outstanding payments.
Industry sources said LPP sources more than US$700 million worth of apparel from Bangladesh annually, with approximately 772 Bangladeshi companies involved in its supply chain.
Exporters fear that the ongoing legal dispute, unresolved payment claims and LPP’s decision to suspend business with Bangladesh could disrupt future sourcing relationships and create significant uncertainty for hundreds of local garment manufacturers.
Source: TBS
