Menu
Disgruntled Dick Smith investors get their day in court

Disgruntled Dick Smith investors get their day in court

The class action scrutinises the financial information Dick Smith and members of its leadership team presented to shareholders

One of the two class actions being launched against Dick Smith Holdings has been given the green light to go ahead by the Supreme Court of NSW, joining at least two other associated legal cases in the process.

The latest class action is being brought against the entity remaining following the retailer’s collapse in 2016 -- now under the control of receivers, Ferrier Hodgson -- by Johnson Winter & Slattery, in partnership with Investor Claim Partner (ICP).

It comes after Bannister Law, in partnership with Vannin Capital, formally filed another class action against the liquidated entity remaining following the retailer’s collapse early last year in the Supreme Court of NSW on 28 September 2017.

That action was also filed against two of Dick Smith Holdings' former directors, former CEO, Nicholas Abboud, and former CFO, Michael Potts.

Both class actions scrutinise the financial information Dick Smith Holdings (DSH) and members of its leadership team presented to shareholders, with allegations in both legal actions of inflated figures.

The class action proceedings launched by Bannister Law is understood to largely be representing the interests of smaller, ‘mum-and-dad’ investors, while the action filed by Johnson Winter & Slattery has been lodged for larger, institutional investors.

The legal proceedings filed by Johnson Winter & Slattery allege that the failed electronics and IT retailer inflated the combined value of its assets and equity by about $150 million, after tax.

In an overview of the proposed claim against Dick Smith Holdings (DSH), Johnson Winter & Slattery said that the action will allege DSH made misleading and deceptive statements about its financial standing.

Specifically, the action will allege that DSH omitted information that investors and their professional advisers would “reasonably require to make a properly informed assessment of DSH’s assets and liabilities, financial position, performance and future performance”.

The law firm also said it will allege that DSH engaged in misleading and deceptive conduct and breached its continuous disclosure obligations by making representations and omitting to disclose information.

The NSW Supreme Court’s Justice Ashley Black, handed down a decision on 9 February, granting leave for the commencement of the latest class action – dubbed the “Mastoris Proceedings” -- which was filed by Johnson Winter & Slattery in early December last year.

“I am satisfied that the proposed Mastoris Proceedings have a solid foundation and give rise to a serious dispute,” Justice Black said.

The earlier class action by Bannister Law alleges that DSHE, Abboud and Potts “contravened the provisions of the Corporation Act as DSHE’s financial statement results published to the market in 2015 were misleading and deceptive”.

Specifically, the action alleges that the DSHE, along with the two former directors, did not give a true and fair view of the financial performance of the company and were not prepared in accordance with Australian Accounting Standards.

In particular, it is alleged that the accounting treatment of rebates by DSHE artificially inflated its reported profit and overstated EBITDA.

The cases were launched after the collapse of the retailer in early 2016, along with the closure of its stores, followed closely behind a $60 million inventory write-down revealed in late 2015.

A rebate-focused inventory buying policy was one of the main triggers of the company’s collapse, according to a subsequent creditors’ report.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags retaillegaldick smith

Brand Post

Featured

Slideshows

Reseller News Platinum Club celebrates leading partners in 2019

Reseller News Platinum Club celebrates leading partners in 2019

The leading players of the New Zealand channel came together to celebrate a year of achievement at the annual Reseller News Platinum Club lunch in Auckland. Following the Reseller News Innovation Awards, Platinum Club provides a platform to showcase the top performing partners and start-ups of the past 12 months.

Reseller News Platinum Club celebrates leading partners in 2019
Reseller News hosts alumnae breakfast for Women in ICT Awards

Reseller News hosts alumnae breakfast for Women in ICT Awards

Reseller News hosted its second annual alumnae breakfast for the Women in ICT Awards in New Zealand, designed to showcase the leading female leaders in the industry. Held at The Cordis in Auckland, attendees came together to hear inspiring keynotes and panel discussions, alongside high-level networking among peers. Photos by Gino Demeer.

Reseller News hosts alumnae breakfast for Women in ICT Awards
Reseller News Innovation Awards 2019: meet the winners

Reseller News Innovation Awards 2019: meet the winners

Reseller News honoured the standout players of the New Zealand channel in front of more than 480 technology leaders in Auckland on 23 October, recognising the achievements of top partners, emerging entrants and innovative start-ups.

Reseller News Innovation Awards 2019: meet the winners
Show Comments