Bangladeshi garment suppliers—battered by the pandemic and the unethical business practices of Western clothing giants—have settled with one of their biggest tormentors: Sears. The crumbling retailer left its manufacturers with stacks of its clothing and unpaid bills last spring and has stiffed them multiple times before as it muddled through ugly bankruptcy proceedings. According to attorney Joseph E. Sarachek, whose firm represented the 21 Bangladeshi factories in a $40 million lawsuit filed against Sears last June, his clients have reached 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 Sarachek.
Although details of the settlement are confidential, one impacted supplier, Fahim Iqbal, the director of Dhaka-based Patriot Eco Apparel, says the settlement reached was around 10% to 15% of the total amount owed. In his eyes, the suppliers have lost once again: “The bottom line is there wasn’t really a victory,” he writes via email.
Sears is far from alone in shortchanging suppliers during the pandemic. 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 KSS -2.1%, Global Brands Group and Arcadia (owners of Topshop), refused payment to factories 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. The cancellations “contributed to an evolving humanitarian disaster in Bangladesh and elsewhere in Asia,” according to lawyers representing factory owners.
