Discrepancy of Tk70.84cr: Fu-Wang Foods new owner Minori files arbitration suit against ex-owners 

The new owner of Fu-Wang Foods, Minori Bangladesh, along with its Managing Director Miya Mamun, has filed an arbitration suit against the publicly listed company's former owners, accusing them of failing to disclose liabilities worth Tk70.84 crore during the sale of their shares.

The petition, filed recently in the District Judge's Court under the Arbitration Act 2001, seeks the appointment of an arbitrator to resolve the dispute. 

The case has been brought against Arif Ahmed Chowdhury, Afsana Tarannum, and Lubaba Tabassum — the former owners who sold their stakes in Fu-Wang Foods to Mamun.

Minori Bangladesh is a local subsidiary of Japanese farming company Minori Co Ltd. The firm is headed by Japan-based investor of Bangladeshi origin Miya Mamun, who acquired a 7.85% stake in Fu-Wang Foods through a deal finalised in 2022. 

The remaining shares of Fu-Wang Foods, which has been listed on the stock market since 2000, are held by general and institutional investors.

As per the petition, the former owners, referred to as the opposite parties, entered into a contract with Miya Mamun on 15 January 2022 to sell their stakes in Fu-Wang Foods at a fixed price of Tk8.44 crore.

As per the share purchase agreement, the opposite parties were required to fully disclose all liabilities of Fu-Wang Foods and its subsidiaries, including those owed to banks, financial institutions, government agencies, or any private organisation, in detail, within seven working days from the execution of the agreement.

According to Clause 4.03 of the agreement, failure to disclose such liabilities within the stipulated time would make the sellers liable for any undisclosed dues.

Speaking to The Business Standard, Mamun said, "The sellers did not disclose the outstanding liabilities of the company on time. After taking charge, we began receiving numerous letters from tax authorities demanding payment of dues."

He added, "With a view to reviving Fu-Wang Foods, I have already injected funds and plan to invest more.

"However, we are facing various impediments due to the undisclosed liabilities. To reach an amicable solution to these disputes, we have filed a suit seeking the appointment of an arbitrator."

When contacted, former owner Arif Ahmed said, "I left the company long ago. I don't know anything," before hanging up the phone.

As per the suit, the new owners discovered that several VAT-related cases were pending against Fu-Wang Foods and its subsidiaries. 

The VAT liabilities alone amount to Tk59.93 crore, while additional undisclosed tax liabilities stand at Tk10.91 crore, which, under the agreement, the opposite parties were obligated to disclose but deliberately withheld from the petitioners at the time of signing the agreement, it added.

According to the suit, the new owner is now facing multiple legal actions and is at risk of severe financial penalties. It further stated that this constitutes a clear breach of the agreement and that the former owners are fully liable for all such liabilities and must compensate the new owner for the damages caused.