Following on from media reports of the expansion of the Squire Patton Boggs class action suit yesterday, Getswift Ltd (ASX: GSW) announced to the market this morning that it had been served with another lawsuit by law firm Corrs Chambers Westgarth.
This second lawsuit, the 'McTaggart' statement of claim, is funded by Vannin Capital and alleges that Getswift breached its continuous disclosure obligations and engaged in misleading and deceptive conduct. The McTaggart lawsuit covers broadly the same period of time as the 'Perera' claim (the Squire Patton Boggs suit) although the period covered is two days longer.
Both lawsuits are scheduled for a hearing on the 29th of March. Getswift will ask the Court to consider how to advance the two competing cases. Getswift also stated that it would contest the suits and had hired Quinn Emanuel to defend it.
So what?
The lawyers are certainly circling Getswift, which was a given after the Fairfax Media (ASX:FXJ) investigation and the subsequent decline in share price once the company returned from its suspension earlier this year. With all the cash Getswift has, there's plenty for the lawyers to target and I would guess that the legal claims would be claiming losses of several hundred million. Should the claim ultimately be decided or settled, the cost to Getswift will likely be much lower.
Even so, with $96 million in cash at bank – approximately 52 cents a share as of 31 December 2017 – surely a significant amount of that is at risk in the coming class action. Class actions can take years to resolve, but given the seriousness of the claims against Getswift, it's possible that the company may look to settle.
Unless there is major progress made on the revenue front, my guess is that Getswift may see itself with a new executive team in due course. Despite their significant shareholdings and the lack of an independent board, the current team may struggle to continue in their roles if the class action strips away most of Getswift's assets. For now I would continue to avoid Getswift.
