Taiwan-based toy manufacturer Sales Chief Enterprise Co. Ltd. and U.S.-based toy vendor Redman & Associates LLC are attempting to resolve a contract dispute that is holding up delivery of some products ahead of the holiday buying season.
Rogers, Ark.-based Redman filed a lawsuit on Sept. 5 accusing Sales Chief of breach of contract and other civil offenses for allegedly revoking its credit terms, disrupting its supply chain, and interfering with its ability to fill orders and generate revenue.
Sales Chief was given a deadline of Sept. 26 to respond to the lawsuit seeking more than $20 million in U.S. District Court in Fayetteville, Ark. However, Redman filed an unopposed motion on Sept. 22 to extend Sales Chief's response time by 90 days.
The parties are “actively engaged in settlement discussions that contemplate fulfillment of certain orders during the approaching holiday season,” the motion says.
The motion asks the court for an additional three months “to fully explore and demonstrate the viability of potential settlement options.” The motion says the parties are trying to resolve their issues amicably before the next filing deadline, which would be Dec. 26.
Redman supplies Wal-Mart Inc. with battery-operated, ride-on cars for children. The company is in the process of shifting manufacturing of the six-volt toy vehicles from Sales Chief's contract manufacturers in China to Arkansas as part of the world's largest retailer's commitment to buy more U.S.-made goods.
Redman formed an unofficial partnership with Bentonville Plastics Inc., a custom injection molder in Bentonville, Ark., to help with the reshoring effort.
While the motion does not mention Wal-Mart or battery-operated cars, the lawsuit does. The 20-page complaint says Sales Chief is trying to make an example out of Redman and undermine Wal-Mart's initiative. However, a Sales Chief official denied that in a phone interview with Plastics News.
The parties' contract dispute goes back to May, when Sales Chief allegedly revoked Redman's credit and refused to release shipped goods without up-front payment. Redman was forced to deplete much of its working capital and credit to release some goods and maintain an uninterrupted supply to Wal-Mart, according to the lawsuit. A hold remains on other goods and Redman is incurring “excessive” freight, storage and logistical fees of $1.4 million and counting, the lawsuit also says.