Free Subscription

  • Access daily briefings and unlimited news articles

Premium

Only $34.95 per year
  • Quarterly magazine and digital
  • Indepth executive interviews
  • Unlimited news and insights
  • Expert opinion and analysis

Litigation funder pulls out of Woolies class action

WoolworthsThe future of a potential shareholder class action against Woolworths is now uncertain after litigation funder IMF Bentham announced that it will discontinue its support for the legal action.

IMF said on Wednesday evening that, following “careful deliberation and further investigation”, the class action no longer meets its investment criteria.

In April last year, when the possibility of a class action was flagged, it was reported that it could be worth up to $100 million.

The proposed class action was initiated by a group of shareholders, represented by Maurice Blackburn Lawyers, and related to a trading update provided by the retailer in 2014. In August of 2014, Woolworths provided guidance that it expected net profit after tax (NPAT) to increase between 4 and 7 per cent.

This was then reaffirmed later that year in November by then-chairman Ralph Waters, but in February 2015 Woolworths downgraded its guidance to between 1.8 and 6.6 per cent. Woolworths share price subsequently declined by more than 13 per cent in the following days.

IMF and MBL had been weighing up options for a potential class action, including reaching out to those who acquired shares in Woolworths between 27 November 2014 and 26 February 2015 and held those shares on the 27th of February.

MBL had previously signalled that going ahead with the class action would be subject to further investigation into whether Woolworths knew or should have known that its sales were slowing in its supermarkets business at the time. IMF said it will write off approximately $151,000 in relation to the ditched class action.

You have 3 free articles.