The chain, which has over 45 women's clothing stores here, is facing a so-called winding up action from supplier A-Go Fashion Trading.

If approved, the application could essentially close This Fashion, putting it in the hands of any creditors.

The threat to pull the shutters down on the chain comes after the supplier successfully sued it for $247,000 in January. A-Go claimed the retailer, which also has stores in Malaysia, had not paid for several clothes shipments.

It appears from court documents that the fallout between the companies started more than five years ago. It is perhaps a surprising reversal for the heads of the two firms, who were said to have been good friends.

In court files, A-Go Fashion claimed it delivered goods to This Fashion between 1991 and 2003.

But by early 2003, there were 'signs' that This Fashion was unable to make payments.

The company's debt to the supplier had 'snowballed' to about $400,000.

According to court documents filed by A-Go Fashion, there were only 'insubstantial monthly payments' of $1,000 to $3,000 made on the debt from mid-2003, even though This Fashion said it would pay out the invoices within three years.

This led A-Go Fashion, run by Mr Ng Loo Yek, to sue for the remainder.

In response, This Fashion said Mr Ng breached a series of oral contracts, causing the chain to suffer heavy losses.

These supposedly included an arrangement that Mr Ng would supply clothes made in only one China factory to This Fashion. In addition, Mr Ng allegedly marked up prices beyond what was set out in an oral agreement.

This Fashion, headed by managing director Teo Ting Seng, also claimed A-Go Fashion had 'suddenly and unexpectedly' cut off clothes shipments in May 2003. The move caused This Fashion losses of $2.5 million, said the firm, which filed a counter-claim.

A-Go Fashion, represented by lawyers Adrian Wong and Ho Hua Chyi, disputed This Fashion's arguments and called the counter-claim a 'sham'.

Meanwhile, This Fashion has launched an appeal against the January court decision that ordered the firm to hand over the $247,000.

However, A-Go Fashion, in an attempt to enforce the judgment, filed the winding-up application in the Supreme Court after its demand for payment was not met. It is scheduled to be heard in May.

This Fashion's lawyer claimed yesterday that the case will not go that far, saying they are negotiating a settlement.

The amount owed was 'small' for a 'big company', said Mr Alfred Dodwell when contacted yesterday. 'It's not going to be wound up.'

Mr Teo and Mr Ng were said to be friends. Both are now overseas.

A check at two This Fashion outlets yesterday found it was business as usual.

Staff were cheerfully helping customers pick out tops and skirts.

An employee of This Fashion said: 'Some long-term customers had come to the shops with a notice of the winding-up application cut out from the newspapers. But there is really no danger to us; we are all very relaxed.'

joolin@sph.com.sg