Vietnamese textile firm (TCM) could lose over $2 million in Sears bankruptcy
U.S. lawyers believe Vietnamese textile company Thanh Cong can only recover part of the $4 million bankrupt U.S. retailer Sears Holdings owes it.
Tran Nhu Tung, a director at Thanh Cong Textiles (TCM), said Sears’ debt of VND95 billion ($4.1 million) accounts for 3 percent of his company’s total assets.
"U.S. lawyers say we can recover 40-50 percent of this debt, but when is still not known," he said at a recent conference. His firm is still awaiting a decision from a U.S. court on the bankruptcy proceedings the retail chain filed in October 2018.
"We have also been trying to negotiate with Sears to switch from pay-after-delivery to a letter of credit," he said.
TCM expects to make a provision for bad debts to reduce its tax burden.
According to Tung, Sears Holdings had ordered for certain fabrics to create fashion products, and because they were made to specific designs, TCM would find it hard to sell them even if Sears ended up returning them.
But a report by Phu Hung Securities said Sears Holding recently received a $300 million injection from a partner to continue its business but with fewer stores to cut costs, meaning Thanh Cong may not have to write off the $4.1 million.
Sears Holdings used to be a major customer for Thanh Cong, with its subsidiaries, Roebuck and Kmart, accounting for almost 7 percent of the textile firm’s revenues.
Exports account for 88 percent of Thanh Cong’s revenues.
The bankruptcy filing by Sears follows a decade of revenue declines, hundreds of store closures, and years of deals by billionaire Eddie Lampert in an attempt to turn around the company he acquired in 2005 for $11 billion, according to Reuters.