MENU

Getswift Ltd gets hit with its second class action suit

Following on from media reports of the expansion of the Squire Patton Boggs class action suit yesterdayGetswift 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.

Some people may turn to blue chips instead. After all, for many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Sean O'Neill has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.