Debenhams’ Bangladeshi staff, suppliers in trouble

Yamin Ahmed (not his real name) was a mid-level official at a multinational fashion retail brand. He went to work every day, and in the morning, his two-year-old son would say goodbye to him. Then the boy would wait for his father to come back home in the evening.

Now the boy is very happy as his father has not gone to his office for the last month and plays with him at home. But, the situation is not as delightful for Yamin. He plunged into deep trouble when he lost his job on April 15. 

Yamin Ahmed is one of the 69 employees of Debenhams who lost their jobs in Bangladesh after the British retail brand's sourcing operation collapsed last month. Meanwhile, the UK government has appointed an administrator for the company.

The brand CEO have sent several Video message about business update before it gone to administration and assured employees would be Paid who are not furloughed. Most of the Debenhams UK office employees been furloughed who are getting govt support in this covid-19 situation. But in mid of April, all of a sudden employees in Bangladesh has been informed that they are officially terminated.

Talking with The Business Standard, Yamin Ahmed said his five-member family, including his parents, were fully dependent on his job. Now he is struggling to manage his family's expenses.

If he does not get compensation from the UK-based company, he will lose his personal deposit. 

Sources said the Debenhams Bangladesh office was registered with Debenhams Hongkong Limited. However, the company reported to the UK office. 

On April 15, Bangladesh officials were informed, by email, that they were no longer employees of the company. 

Yamin Ahmed claimed that the brand terminated all of them unlawfully – as the move conflicts with the local law. 

The Bangladesh government had earlier issued a directive saying no one would be terminated or laid off during the novel coronavirus outbreak, he added.

A company is entitled to shut its business anytime but it should comply with local laws, Yamin says. "We have demanded our compensation. However, we have no clear information about when we will get the compensation."

The Debenhams Bangladesh office was a profitable centre, where employees' average salary was $1,000 per month, and the brand's annual business size was about $110 million. 

The Bangladesh office has not kept any commission on the business, the officials added.

The Bangladesh office employees have requested Debenhams maintain a minimum of ethics. 

Yamin Ahmed said customers are observing how the company is treating its employees. "We have been thrown out empty-handed though we did all the hard work, day and night, for the company." 

Debenhams employees say they have been terminated without the payment of: April's salary, four months' salary in lieu, severance pay, the annual festival bonus, and the provident fund.

As former employees, they have no communication with the brand but their lives are at risk as local office landlords, and other Bangladeshi creditors are threatening them for due payments, officials said. 

"No one knew the Debenhams UK officials, they did business with us," said Yamin.

Former employees said after taking charge, KPMG in Hong Kong is handling the liquidation of Debenhams' sourcing operation, including the Bangladesh office.

Debenhams is operating in accordance with the UK's insolvency law – where all unsecured creditors have to be treated in the same manner, said Yamin Ahmed, adding that the liquidator has not given them any information about their payment.

35 suppliers in big trouble

About 35 Bangladeshi suppliers are in big trouble now that Debenhams has filed a bankruptcy petition. 

The brand has about $69 million liabilities to its Bangladeshi suppliers as the cost of shipped goods, ready goods and fabrics plus accessories. 

Of them, about $26 million's-worth of goods have already been released but payment has not been made, about $6 million's-worth of goods are at UK ports, about $7 million's worth of goods are ready for shipment, and about $30 million's-worth of raw materials has been brought by the suppliers. 

After taking charge, the new administrator has offered to pay just 10 percent of the liabilities but suppliers rejected the offer, sources said. 

Now the retailer has agreed to pay about 75 percent of $6 million's-worth of goods, which are now at UK ports, suppliers said.

"We are in a discussion about $6 million's worth of goods. The administrator wants to pay us a 25 percent discounted amount to release the goods," said SM Khaled, managing director of Snowtex Outerwear Ltd, one of top five suppliers of Debenhams.

Of the $6 million's-worth of goods, Snowtex holds $1.8 million. 

SM Khaled said, "In 2020, our business with Debenhams was supposed to be $7.7 million."

The new administrator is not discussing the total liabilities, he added. 

"Like all retailers, we had to make some very tough decisions in relation to our supply chain. We are trying to deal with all those affected as fairly and openly as possible," said a spokesperson for Debenhams.

"As we have said, suppliers who continue to work with us during our administration period, will be paid to terms," he said. 

The department store retailer's UK operation failed in April, when it also said it would likely appoint a liquidator for its Irish operations.

The retail group, which has 142 UK stores and employs around 22,000 staff, took the step to protect the company against claims from creditors during the Covid-19 pandemic.