"B/w 4/20/12 - 7/27/12, my company, E`LAN NYC INC, a fashion services company based in New york, and offering apparel development and manufacturing services to the trade, received multiple apparel manufacturing POs (with later revisions on some) from Karmaloop (all POs were clearly marked BILL TO KARMALOOP) and multiple deposits for this POs were made by Karmaloop to green-light the various orders. Our factories are in New York and Overseas in Shanghai, China. The POs in question were specifically for our Overseas production services.
POs in Question:
1) SPOOL & THREAD BTS 2012 PO (Purchase Order #SPT33950P)
Actual manufactured PO value: $94, 812.50
Karmaloop deposit (Multiple) - ($37,207.50 on 04/25/12 + $2,670.50 on 07/27/12) : $39,878
Actual invoice value of First delivery received: $43,487.5
Actual PO value manufactured and not paid for and collected:51, 325
2) BRICK HARBOR BTS '12 PO
Actual manufactured PO value: $17, 046.48
Karmaloop deposit : $5,497.20
Actual invoice value of First delivery received: $7,062.48
Actual PO value manufactured and not paid for and collected: 9,984
3) SCOUT BULL DENIM PANT BTS12 PO
Actual manufactured PO value: $12,600
Karmaloop deposit (04/25/12) : $4,860
TOTAL ACTUAL MANUFACTURED VALUE LISTED POs:$124,458.98
TOTAL DEPOSITS PAID BY KARMALOOP FOR LISTED POs: $50,235.2
ACTUAL TOTAL POs VALUE OF GOODS RECEIVED BY KARMALOOP: $50,549.98
ACTUAL MANUFACTURED VALUE OWED TO E'LAN NYC INC BY KARMALOOP FOR LISTED POs: $74,223.78.
We delivered the first shipment from SPOOL & THREAD BTS 2012 PO (Purchase Order #SPT33950P) and 2) BRICK HARBOR BTS '12 PO in August valued at $50,549.98 to their warehouse in Kentucky. At final delivery, all pre-shipment samples were sent to Karmaloop for approval for ship out, as is the industry norm and as was the case with the first shipment which was delivered and received.
Owing to past default payment experiences after delivery, from a good list of clients in the past, we had informed Karmaloop that our preference will be for them to see if they could arrange further physical inspection of the goods at our factory in China, in addition to the physical samples we had already given them for pre-shipment approval, in case they had any doubts about the quality of the items as finished and ready to ship, because we wanted to be paid in full prior to ship out. Our overall experience with them in the course of the work had not been encouraging, so we feared a repeat of the defaults.
Karmaloop did not even make any considerable effort to discuss this fear with us or offer any payment assurances but instead decided not to accept the goods they had ordered. They simply worked away and abandoned us with $74,223.78 in balance due to us and left us stuck with the goods at the factory in China.
This has led to unimaginable operational and personal problem for us and our company and our business. With our suppliers Overseas in China to pay for services already rendered on account of executing these POs, and payroll and operational bills and taxes to pay locally, it meant that we had no funds to operate, as we had used all our resources getting the projects executed . To make things worse, the Chinese Government took notice that these default had occurred and and we had to fix them by paying all the suppliers - fabric mills and all contracted factories that did cut & sew for us avoid trouble with the Government, which would have hurt our future operations in China.
Karmaloop gave us these POs and deposited to validate these orders and make them formally contractual. As a result we set about starting and finishing the jobs. These meant huge capital outlays from our part, using credit lines we hoped to pay back on delivery and payment. Karmaloop nullified all these by reneging on these contracts and these has led to unimaginable problems for my company, with most of our humble resources used to complete this job.
Karmaloop walked away with goods roughly commensurate with their deposit, but the POs were for the full orders as were the deposits.
We want Karmaloop to pay us the $74,223.78 in balance due that we lost when the breached the contracts. This is money we actually lost in payments to our contractors and bank facilities we had used to prosecute these jobs with the expectation of recouping these expenses upon POs execution and delivery. Karmaloop denied us this.
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