Bubs’ distributor in China seeking to claw back $20m for unsold stock

afr.com:

Bubs Australia says its key distributor in China is seeking to claw back more than $20 million from the troubled baby formula company as refund for ageing stock sitting unsold in its warehouses.

AZ Global founder Andy Zhang is a supporter of a push by Bubs’ former chief executive, Kristy Carr, and ex-chairman Dennis Lin to remove the company’s board and install new management at a meeting this month.

Bubs has been chasing debts of $5.65 million associated with AZ Global, the key distributor for formula being sold into China. Ms Carr had also sought to recoup the money, without luck, while running Bubs.

Andy Zhang – the founder of AZ Global, the biggest daigou trader in Australia – is seeking a refund for unsold stock. Edwina Pickles

AZ Global is a major distributor of Australian brands, including Bellamy’s and Aptamil, into China. Two companies related to AZ Global, known as Willis Trading and Alice Trading, buy directly from Bubs.

The majority of stock acquired between August and March remains unsold. Bubs said that not only had the distributor failed to repay its debts, but was also seeking a refund because the “previous Bubs management team” had promised to unconditionally take back any stock that could not be sold.

Another company associated with AZ Global, Hong Kong-listed Alpha Professional Holdings, wants a refund of $7.5 million for unsold stock, and says Bubs owes it a $12.9 million credit in new stock for tins nearing their expiry which cannot be sold.

To make matters more complicated, Bubs agreed last year to give Willis Trading a 4.8 per cent stake in itself if Alpha made certain purchases. Willis Trading has been Bubs’ largest customer for more than two years.

A Bubs spokesman said the contract was a