Menswear supplier Bagir has resolved to take legal action against Shandong Ruyi after the Chinese clothing giant has failed on payments of its promised investment.
In November 2017 Shandong Ruyi Group pledged an investment of $16.5m (£12.4m) for a 54% stake in Bagir. This would have seen the group become its majority shareholder.
Bagir is now taking legal action against the group’s outstanding payment of $13.2m (£10.2m) after it failed to meet its extended deadline.
The supplier said it had extended the payment deadline to 31 March 2020, conditional on Shandong Ruyi providing suit jacket manufacturing equipment by the end of September 2019, which has an estimated market value of approximately $1.3m (£1m).
This manufacturing equipment has not been delivered, Bagir said.
Sales at Bagir grew 9% to $59.4m (£45.9m) for the year to 31 December 2019. The supplier is finalising plans to establish a new production line in Ethiopia to manufacture suit jackets, with a trial order for a large UK retail client to be delivered in March.
Micha Ronen, CEO of Bagir said: “It is disappointing to announce our decision to have to take legal action against the Shandong Ruyi Group but we have been left with no alternative. This will, however, mean our operational focus can now be solely focused on Bagir and making innovative, modern, design-led tailored garments for the world’s leading retailers.”
The legal action follows news in December that Portuguese textiles supplier Calvelex was planning to sue Shandong Ruyi over unpaid invoices.
Shandong Ruyi has been contacted for comment.