Israeli garments firm Bagir is preparing to sue Ruyi Group for its failure to settle payment for controlling shares in the firm.

Ruyi moved to acquire a 54 per cent shareholding of Bagir in November 2017 as a part of its global expansion and aspirations to build a Chinese house of international fashion brands. At the time, Ruyi was in the process of picking up multiple well-known such brands for its portfolio.

Originally scheduled for completion by late 2018, Ruyi sought a postponement to finalise the US$16.5 million deal owing to an unexpectedly lengthy period of official scrutiny by the Chinese administration.

Bagir received important business opportunities under the proposed deal, including the expansion of its suit pants production in Ethiopia. The group’s stock also rose sharply following the announcement of the shares acquisition.

With the impact of the Sino-US trade war placing the textiles and apparel industry under a period of uncertainty, the operation of Bagir has not improved as promised before the acquisition, and its Ethiopian factory has not attained its 2018 production goal.

“Ruyi Group is conducting friendly negotiations with Bagir to properly resolve the acquisition issue and ensure that both parties’ benefits are fully protected,” said Ruyi Group spokesman Chris Chen.

The overdue payment on the deal is reportedly $10 million.