Dick Smith shareholders one step closer to class action
A class action against failed electronics chain Dick Smith on behalf of disgruntled shareholders has been given the green light.
The Supreme Court of NSW has granted legal firm Bannister Law leave to file a class action against Dick Smith (DSHE) on Monday.
Bannister Law principal Charles Bannister says the ruling is a win for shareholders who lost a lot of money when the company collapsed in January 2016.
“Thousands of shareholders have lost tens of millions because, we allege, DSHE contravened provisions of the Corporations Act, including by engaging in misleading or deceptive conduct on various occasions throughout 2015,” he said in a statement on Tuesday.
Bannister said the firm alleges that the retailer misled shareholders about the financial health of the company through directors’ declarations that the accounts during 2015 were up to Australian Accounting Standards.
He said it will be alleged that the use of supplier rebates to artificially inflate Dick Smith’s reported profit deceived shareholders who have suffered loss and damage as a result.
Another litigation firm, Investor Claim Partner, is also investigating a class action on behalf of shareholders.
This is on top of claims filed earlier in 2017 in the Federal Court by Dick Smith’s lenders, National Australia Bank and HSBC.
The banks accuse the company of buying “bad stock” to inflate income and earnings.
Dick Smith went into administration after failing to secure a funds injection from its banks last year. Kogan.com subsequently bought the brand’s online business in March 2016.
A spokesperson for Bannister Law said the class action will not impact Kogan.com, which was not involved with Dick Smith at the time of the alleged deceptive conduct.
“We will be going after the insurance policies of the previous directors,” the spokesperson explained.
“We will have to go through the liquidators.”
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