FAISALABAD, Nov 24: Business transactions in the local cotton yarn market came to a halt here on Thursday following the announcement of bankruptcy by a major party.
Commission agents, yarn dealers and big parties preferred to stay away and did not placing any kind of orders of purchase or sale of cotton yarn and cloth. Majority of dealers remained busy throughout the day in updating their ledgers and recovery from their partners and colleagues.
About a dozen major yarn dealers, also involved in exports and textile business, spent their maximum time in the yarn market and held discussions with members of the Pakistan Yarn Merchants Association to resolve the issue. They suggest the recovery of maximum amount from the defaulter so that it could be distributed among the affected parties.
The bankrupt, Shahzad Ahmed Qasoori, has so far provided cash and yarn worth over Rs35 million, while he is a defaulter of Rs150 million.
Shahzad Qasoori took advantage of dent of his family and attracted a large number of investors. He reportedly disappeared from the scene a couple of days ago and declared himself as bankrupt which caused panic in the yarn market. Shahzad conveyed to some of investors that owing to some miscalculation in the transaction, he had lost the entire invested money.
Sources said PYMA office-bearers unlock godowns of the yarn dealer and sealed yarn and cloth worth over Rs15 million. The PYMA also assured the affected parties of compensation to some extent by collecting cash from all available sources.
Transactions worth hundreds of millions of rupees are made in the local yarn market without any entry into ledgers. No cash is involved in the dealings except chits of white papers marked with amounts ranging from Rs1 million to Rs10 million. This system of transactions is used by merchants with established goodwill, while others used to exchange CDRs and bank cheques. The business dealings through white paper chits are major factor in the escaping of dealers by collecting hard-earned money of agents and business partners because the chits inscribed with amounts have absolutely no legal value at any shape.
