Additionally, it is alleged that for each of the financial reports for 1H14, FY14, 1H15 and FY15, DSH made misrepresentations and non-disclosures in respect of a number of matters that individually and collectively were in breach of the Corporations Act.
At present, a determination is yet to be made as to whether certain Dick Smith directors ought to also be joined as defendants to any proceedings to “enhance recovery” for shareholders.
“That will be a matter senior counsel advises on after reviewing all of the materials and taking into account the practical implications of adding further defendants,” Johnson Winter & Slattery said in a letter to litigants.
“It is public knowledge that there are significant insurance policies available both for the company and the directors for the secondary market claims and separately for the prospectus claim,” it said.
The class action outline comes roughly a month after the other class action being launched against Dick Smith Holdings on behalf of hundreds of the failed tech retailer’s shareholders was filed in court.
Bannister Law, the law firm undertaking the other legal operation, formally filed a class action against the liquidated entity remaining following the retailer’s collapse in the Supreme Court of NSW on 28 September.
The action has also been filed against two of Dick Smith Holdings' former directors, former CEO, Nicholas Abboud, and former CFO, Michael Potts.
The class action, which is being funded by Vannin Capital, alleges that DSH, Abboud and Potts “contravened the provisions of the Corporation Act as DSH’s financial statement results published to the market in 2015 were misleading and deceptive”.
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.
The rebate-focused inventory buying policy was one of the one of the main triggers of the company’s collapse, according to a subsequent creditors’ report.