Li & Fung addresses KB's debt to Chinese factories
By Staff -- Playthings, 1/5/2009 7:56:00 AM
HONG KONG—Faced with an organized campaign by former KB Toys suppliers to recoup monies owed them for delivered products, the toy retailer’s former buying agent, Li & Fung Ltd., said today it would do what it could to help but that it was not responsible for paying KB’s debts to the companies involved.
Desipte managing the production of orders at factories appointed by the U.S. toy retailer, Li & Fung said in a statement that “the outstanding amounts due to the factories are owed by KB Toys.” The company itself is one of KB’s largest creditors; it’s owed approximately $5 million, representing mainly unpaid commissions, according to Henry Chan, Li & Fung’s executive director.
"As one of the largest creditors of KB Toys, Li & Fung will seek proper recourse from the bankruptcy courts and has approached most of the affected factories to meet with the [Li & Fung Group] to discuss how it can help them to deal with the bankruptcy proceedings in the U.S.,” Chan said.
A group of more than 100 Chinese toy manufacturers calling itself the Joint Committee for Li & Fung Credits, said in a press conference today that it was seeking upwards of $10 million (HK$78 million) from Li & Fung for unpaid costs incurred fulfilling orders for KB Toys.
"[Li & Fung], not KB Toys, was the one issuing the letters of credit to the toy makers, and so they should be the ones making the payments," Lewis Luk, a spokesperson for the group, said at the press conference, according to the news service AFP.
The Joint Committee said it would seek government intervention or legal action were Li & Fung to refuse to reimburse its members.
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