Former Dick Smith directors and their insurance Companies are facing a second wave of litigation over the $400M collapse of the consumer electronics retailer.
Shareholders who were out of pocket after an initial $520M raising that saw Anchorage Capital and select directors including former CEO Nick Aboud walk away with millions have engaged Litigation funder ICP in an effort to try and claw back some of $200M of their losses.
Currently ICP is finalising the funding of the action which follows a similar action by Bannister Law last month.
The Australian legal firm who filed a class action in the Supreme Court of NSW against DSHE Holdings and two former senior executives, Nick Abboud and Michael Potts is being funded by UK litigation funder Vannin Capital, filed a class action in the Supreme Court of NSW against DSHE Holdings and two former senior executives, Nick Abboud and Michael Potts.
The proceedings were filed on behalf of DSHE shareholders who bought shares between February 16, 2015, and January 3, 2016, when Dick Smith went into voluntary administration.
Bannister Law has alleged that Dick Smith’s financial statements in 2015 were “misleading and deceptive” and did not give a “true and fair view” of the company’s financial performance.
The ICP action will be conditional on sufficient numbers of shareholders joining the claim.
ICP will allege there were misrepresentations made in the prospectus as well as in company announcements in subsequent months.
“People who invested in the prospectus lost over $200 million,” ICP founder and chief executive John Walker, the former CEO of litigation funder IMF Bentham, told The Australian Financial Review this year after seeking court approval to inspect company records, including directors and officer’s insurance policies, the prospectus, and stock and rebate records.
Anchorage Capital Partners bought Dick Smith from Woolworths for $94 million in September 2012 and floated it on the ASX for $520 million 15 months later. The retailer collapsed in January 2016, leaving a $260 million shortfall to creditors.
Weeks out from the Company revealing that they were in trouble ChannelNews was told by both Nick Aboud and the Companies Former Marketing Director Neil Merola that the Company was “travelling okay” and that there were no cash shortfalls. They also claimed that Panasonic had not placed Dick Smith on credit hold which subsequently has been proved to be the case.