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Contingencies
3 Months Ended
Apr. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
Contingencies

Labor and other contingencies in Brazil

As disclosed in our periodic filings with the SEC, we agreed to make certain payments in connection with ongoing labor litigation involving our former Brazilian subsidiary (“Lakeland Brazil”). While the vast majority of these labor suits have been resolved, there are labor cases that remain active, including a civil case filed by a former officer of our former Brazilian subsidiary, in which Lakeland was named as a co-defendant.

 

The first case was initially filed in 2010 claiming USD $100,000 owed to plaintiff. This case is on its final appeal to the Brazilian Superior Labor Court, having already been ruled upon in favor of Lakeland more than once. Management firmly believes that Lakeland will continue to prevail in this case. 

 

A second case filed against Lakeland by a former officer of Lakeland Brazil, was filed in Labor court in 2014 claiming Lakeland owed USD $300,000. The Labor court ruled that the claimant’s case was outside of the scope of The Labor court and the case was dismissed. The claimant is appealing within The Labor court system.

 

        A third case filed by a former Lakeland Brazil manager in 2014 was ruled upon in Labor court and awarded the claimant USD $100,000. Both the claimnd Lakeland Brazil have appealed this             decision. Labor Court of Appeal recently ruled in favor of Lakeland Brazil to determine the annulment of the first and previous decision.

 

In the fourth case a former officer of our former Brazilian subsidiary filed a claim seeking approximately USD $700,000 that he alleges is due to him against an unpaid promissory note. Lakeland has not been served with process and no decision on the merits has been issued in this case yet. Management firmly believes these claims to be without any merit and does not anticipate a negative outcome resulting in significant expense to us.

 

Lakeland Brazil may face new labor lawsuits in the short term as a result of the shutdown of its operations in March 2019. The Company has no obligation under the 2015 Shares Transfer Agreement (pursuant to which Agreement, the Company eliminated its interest in Lakeland Brazil) to make any additional payments in connection with these potential new labor lawsuits. The Company also understands that under the labor laws of Brazil, a parent company may be held liable for the labor liabilities of a former Brazilian subsidiary in the case of fraud, misconduct, or under various theories.

 

Although the Company would have the right of adversary system, full defense and due process in case of a potential litigation, there can be no assurance as to the findings of the courts of Brazil. 

  

There are additional cases in Labor and Civil courts against Lakeland Brazil in which Lakeland is not a party, and other outstanding monetary allegations of Lakeland Brazil.

 

In FY19, the Company recorded an accrual of $1.2 million for professional fees and litigation reserves associated with labor claims in Brazil. The accrual on the balance sheet at April 30, 2019 and January 31, 2019 is $1.1 million and $1.2 million, respectively.

 

General litigation contingencies:

The Company is involved in various litigation proceedings arising during the normal course of business which, in the opinion of the management of the Company, will not have a material effect on the Company’s financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these matters. As of April 30, 2019, to the best of the Company’s knowledge, there were no outstanding claims or litigation, except for the labor contingencies in Brazil described above.