Shares in embattled law firm Slater & Gordon Limited (ASX: SGH) have shed around 11 per cent today to a record low of 4.3 cents as the group's nightmare run shows no signs of ending.
Today the company made an announcement to the market acknowledging that its former auditors Pitcher & Partners are being chased for shareholder compensation over their alleged failures in auditing the company back in 2015.
The claimants allege Pitcher & Partners failed in its duty in not picking up that Slater & Gordon was overstating its work in progress on its balance sheet and booking of revenues. It is also alleged that the auditor should have picked up some of the misleading accounting over a number of acquisitions Slater & Gordon made in prior years.
Whether the fallout from the acknowledgment of today's claim is behind the share price fall is hard to know as the law firm remains crushed under a mountain of debt and will need shareholder approval of several resolutions to implement a restructuring scheme. The approval will be sought at a specially scheduled December 19 AGM and if shareholders reject the restructure plan the company could be forced into administration.
