IMF BRACES FOR BIG LOSS FOLLOWING WITHDRAWAL FROM SPOTLESS CLASS ACTION
Written on the 20 June 2017 by Paris Faint
LITIGATION fund IMF Bentham (ASX: IMF) is set to lose as much as half a million dollars after it ceases funding one of the major shareholder class actions it has been backing since February.
Pending the court's approval, IMF announced it will withdraw its funding of William Roberts Lawyers' class action against Spotless Group (ASX: SPO) on the grounds it has discovered new information which has compelled it to cease its financial support.
While the new information remains undisclosed, IMF will adjust its investment portfolio to reflect losses incurred by writing off the class action. It expects these losses will not exceed $510,000.
In February, William Roberts Lawyers became the first of two firms to officially launch a class action against Spotless, alleging that the company breached its continuous disclosure obligations to shareholders and engaged in misleading conduct.
At the time, Bill Petrovsky of William Roberts Lawyers said his firm would allege that the change of Spotless' accounting policy and the financial impact of this change were not properly disclosed.
"Spotless has allegedly modified an accounting policy, without disclosing the change in accordance with the accounting standards," said Petrovsky.
Slater and Gordon, backed financially by Therium Australia, became the second firm to launch a class action against Spotless on similar grounds.
At this stage, there is no indication that Slater and Gordon's case has been affected.
It is also not yet known whether William Roberts Lawyers will continue to pursue its own class action despite the withdrawal of funding from IMF.
Meanwhile, Spotless has released a statement to the ASX saying it welcomed the decision by IMF Bentham to discontinue its class action.
"The decision by IMF Bentham to cease funding the shareholder class action underscores Spotless' position that it has at all times been in compliance with its continuous disclosure obligations," the company says in an ASX statement.
Spotless also acknowledged the announcement yesterday by Downer EDI to waive all remaining defeating conditions to its current takeover offer for Spotless.
Downer says its offer price of $1.15 per Spotless share is final and will not be increased in the absence of a superior proposal.
The Spotless board has again stated it believes the Downer offer to be inadequate and has called on shareholders to reject the offer
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Author: Paris Faint