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Contingencies | 9 Months Ended
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Oct. 31, 2020
Contingencies |
13. Contingencies | 13. 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. While the vast majority of these labor suits have been resolved, there are labor cases that remain active and 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 Supreme Court, having already been ruled upon in favor of Lakeland three times, most recently by the Labor Court Supreme Court. The claimant having lost three times previously, management firmly believes that Lakeland will continue to prevail in this case. A second case filed against Lakeland by a former officer of our former Brazilian subsidiary, 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 appealed the dismissal, and this appeal was also dismissed. The claimant then failed to timely bring a further appeal, so this claim should effectively be time-barred. A third case filed by a former manager of our former Brazilian subsidiary in 2014 was ruled upon in Labor court and awarded the claimant USD $100,000. Both the claimant and Lakeland have appealed this decision and the appeals court sent the case back to the trail court for a rehearing on only one (the calculation of the amount of $100,000) of the claimant’s multiple claims. The claimant thereupon appealed again to a higher court. In the last case a former officer of our former Brazilian subsidiary filed a claim in 2016 seeking approximately USD $700,000 that he alleges is due to him against an unpaid promissory note. Lakeland was defectively 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. Our former Brazilian subsidiary 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 Shares Transfer Agreement (the agreement pursuant to which Lakeland disposed of all of its equity in its former Brazilian subsidiary) 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. The Company has provided for professional fees and litigation reserves associated with potential residual labor claims in Brazil. The accrual on the balance sheet at October 31, 2020 is $0.03 million and at January 31, 2020 is $0.2 million. 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.

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