Lilliput wants to make a fresh start

Kidswear retailer Lilliput, which has been in the news for causing the fallout between Bain Capital and auditing firm EY, said it is eager to give its business a fresh start. The company said that it has already paid part of its dues to its Bangladeshi vendors.

Private equity (PE) firm Bain and ten of its subsidiaries have sued EY Global Ltd and EY LLP in a Massachusetts court, claiming that the investment has now been ‘rendered worthless’. Bain invested $59 million to buy 31 per cent of Lilliput Kidswear. It had alleged that EY was involved in “fraud, aiding and abetting fraud, negligent misrepresentation, and unfair and deceptive trade practices based on EY’s involvement in the scheme to defraud Bain.”

When contacted, Sanjeev Narula, founder and CEO of Lilliput, said he is the sole owner of the company as all PE investors have exited.

“Whatever happened between Bain Capital and EY is between them. Bain exited our company in October last year,” Narula told Business Line.

Bain had picked up 31 per cent stake in Lilliput Kidswear in 2010. Narula had previously alleged that the PE firms (including another investor TPG, which later exited) were looking to take over control of the company.

Asked if Lilliput had repaid dues owed to Bangladesh vendors, Narula said that the dues have been partly settled.

Lilliput reportedly owes $4 million to various vendors from Bangladesh. Interestingly, the Bangladesh Government has sought help from India’s Commerce Department to recover the amount owed to their vendors.

Narula said he had previously explained to the Commerce Department that the default to Bangladeshi vendors by Lilliput was unintentional, as the payment was due at the time when the dispute between the shareholders was ongoing, and banks had put all payments on hold.

Lilliput was established in 2003. Narula said he is trying to “restructure the business”. He claimed that all the stores were individually profitable.

-Business Line