About 160 employees of garment manufacturer and retailer U-Right International Holdings will face unemployment after the listed company went into liquidation after failing to repay debts of at least HK$1.4 billion.

The head office of U-Right in Cheung Sha Wan was closed yesterday. A notice was posted on the door explaining that the company was placed under provisional liquidation by auditing firm Deloitte Touche Tohmatsu.

The appointment came after Deutsche Bank applied to close the debt-ridden U-Right in High Court Monday.

Deloitte was optimistic about the chance of finding white knights to bail the clothes maker out.

"We have been considering restructuring the corporate with two to three investors who feel interested in the network that U-Right has established on the mainland," said provisional liquidator Edmund Yeung Lui-ming in a teleconference.

He hoped the investors would acquire the whole assets of the 25-year-old retailer to continue its business.

Deloitte is expected to bring in new investors to the troubled manufacturer in the next two to three weeks.

Meantime, Deloitte promised to work with the Labour Department to compensate the employees.

The Labour Department set up three hotlines (2150 6397, 2928 7112 or 2928 7002) to provide assistance to the affected staff. As of yesterday, it had received 155 enquiries.

The department will assist the employees in applying for ex-gratia payments.

Service counters are set up at all Labour Relations Offices and Job Centres to respectively help them pursue compensation payment and seek jobs.

According to the Clothing Industry, Clerical and Retail Trade Employees General Union, it is suspected that U-Right threatened its staff that it would forfeit their wages if they talk too much about the crunch of U-Right to others.

"A staff from Tsuen Wan called me for help this morning, but when I called him back later he withdrew his request," the Union's organizing secretary Cheung Tim-choi told China Daily.

The union requested a meeting with U-Right management and its creditors but did not receive any response, while Yeung said he would contact the union if needed.

A U-Right outlet in Central opens for clearance sales yesterday. Edmond Tang

Some of the U-Right outlets in Yau Ma Tei, Mong Kok and Tsim Sha Tsui were still open for clearance sales yesterday.

Some workers said they did not receive any dismissal notice from the company, while others kept their mouths shut.

Yeung said these stores would maintain operation at the moment but might be closed depending on their sales performance.

U-Right stores on the mainland would maintain normal operation.

The company has 95 stores in Hong Kong and another 516 on the mainland. However, this might be the reason of its collapse. Deloitte pointed out that U-Right invested too much on the mainland, causing it to have run out of cash.

U-Right, which was listed on Hong Kong's main board in 2000, saw its share price plummet almost 70 percent over the past month and trading in its shares was suspended on Sep 17 when the share price was recorded at 1.4 HK cents apiece.

Its debt owed to 18 banks and other financial institutions amounted to over HK$1.4 billion, Yeung said.

U-Right is the third listed retailer in Hong Kong to collapse amid the global financial turmoil.

In early September Asia's largest luxury watch retailer Peace Mark (Holdings) and swimwear manufacturer Tack Fat Group International went into liquidation after defaulting on debts.

"U-Right earns little as it sells low-priced causal wear but pays high rents for the shops," said Li Kui-wai, economics and finance associate professor of City University of Hong Kong.

He elaborated that the expensive shops in Central and Tsim Sha Tsui that U-Right rented in the past few years have put the company in a financially difficult situation.

(HK Edition 10/10/2008 page1)