Potential Class Action – Dick Smith Holdings
ICP, which is uniquely focused exclusively on ASX shareholder claims, is proposing a shareholder class action to be run by Johnson Winter Slattery on behalf of aggrieved Dick Smith investors who suffered losses due to alleged breaches of disclosure obligations and misleading and deceptive conduct, subject to sufficient interest from affected Dick Smith shareholders and the satisfactory completion of investigations.REGISTER NOW
Background to the allegations
ICP has had the assistance of Johnson Winter Slattery (JWS), together with a forensic accountant and econometrics expert, to review public information to assess whether there is a shareholder claim emanating as far back as the Dick Smith (DSH) Prospectus.
ICP Capital funded JWS to file a claim in the Federal Court seeking orders that the liquidator of DSH to provide business records including insurance and stock/rebate records to ICP’s client in accordance with sections 247(A) (i) and 486 of the Corporations Act relevant to ICP’s suspicion that DSH made representations in its Prospectus, and at various times in the period from its listing on the ASX until the appointment of Administrators, which gave a false impression to the market about the financial position of DSH and the value of DSH shares. These representations arose, at least in part, by virtue of:
- DSH accounting for supplier rebates in a manner which appears to have inflated its gross profit, gross margin, net profit and EBITDA;
- DSH apparently failing to adequately adjust the carrying value of inventories to recognise net realisable write-downs; and
- DSH presenting in its Prospectus historical financial information for the 2011 and 2012 financial years apparently without recognising the effect of the $420 million impairment and restructuring provision applied by Woolworths.
ICP obtained Federal Court orders for the production of the documents and is presently completing due diligence to determine whether a claim proceeds and, if so, on what basis.