Bankrupt garment manufacturer Hagale has been awarded damages of almost $38 million dollars after a jury ruled that the Land's End clothing company engaged in fraudulent conduct by failing to disclose plans to move work away from the plant to overseas manufacturers.

Thursday's verdict included $4.5 million to the garment manufacturer in compensatory damages and almost $33.5 million in punitive damages.

At its peak, Hagale had 11 facilities and employed more than 1,700 people. Lands' End work represented 72 per cent of Hagale's business, but the company was forced to start closing plants when its 13-year relationship with Lands' End ended in 1999. Hagale was declared bankrupt in January 2001 more than $20 million in debt.

The jury agreed that Lands' End acted with "outrageous and in reckless indifference" to the firm.

All proceeds from any payout will go to US Bankruptcy Court, and then be used to pay Hagale's legal fees and debts. But the verdict provides proof for former Hagale Industries owner Jim Hagale that managers of the company were not to blame for its demise.