Tue, Jan 06, 2009 - Page 11 News List

HK toy makers urge Li & Fung to pay up for failed US retailer

AFP , HONG KONG

More than 40 Hong Kong toy makers who lost money following the collapse of US retailer KB Toys said yesterday they would be seeking compensation from trading firm Li & Fung (利豐).

The manufacturers, who have grouped together to form the Joint Committee for Li & Fung Creditors, said the Hong Kong-listed trading giant, which acted as an agent for KB Toys, had both business and moral obligations to make the payments.

“We have supplied goods indirectly to KB Toys due to our trust in Li & Fung Limited, which is a blue-chip in Hong Kong and a trusted household name in both political and economic circles here,” a spokesman for the group said yesterday.

The group estimated that more than 100 Hong Kong manufacturers, employing some 100,000 workers locally and in China, were victims of the bankruptcy of KB Toys, which collapsed last month, citing a sharp decline in consumer sales.

The spokesman said they were also considering legal actions against KB Toys and Li & Fung.

KB Toys, founded in 1922, announced it would close all 461 of its stores, after revealing liabilities of as much as US$500 million in the petition filed in US Bankruptcy Court in Delaware.

Li & Fung said yesterday morning it had no comment. But it reiterated the company’s earlier announcement that its exposure to the collapse was approximately US$5 million and that other liabilities arising from KB’s collapse were owed directly to the suppliers.

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