Claims

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.

Background to the allegations

Claim Overview

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 provisions and supplier rebates in a manner which appears to have inflated its gross profit, gross margin, net profit and EBITDA and NPAT;
  • 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 – 2013 years, which overstated the value of assets and equity available to ensure its expansionary business plan would be possible.
Current Status

The mediation has been extended to 2 September 2019.

Orders were made on 19 March 2019 for the further conduct of the matter, including the following:

  • Dick Smith and Messrs. Abboud and Potts to serve all evidence (other than evidence in relation to loss or damage) on which they rely by 26 July 2019.
  • Dick Smith and Messrs. Abboud and Potts to serve all expert evidence in relation to loss or damage on which they rely together with a provisional list of documents to be tendered by 30 August 2019.
  • Deloitte to serve all evidence on which they rely together with a provisional list of documents to be tendered by 22 November 2019.
  • The Plaintiffs to serve any evidence in reply to the evidence served by Dick Smith and Messrs. Abboud and Potts by 27 September 2019.
  • The Cross–Claimants to serve all evidence in reply on the Cross-Claims, and the Plaintiffs to serve all evidence in reply to the evidence served by Deloitte, by 20 December 2019.

The matter is listed for hearing for 12 weeks commencing 9 March 2020.