ASIC followed that up last week with a civil claim against GetSwift and its chief executive Bane Hunter and president and managing director Joel Macdonald for contraventions of the Corporations Act. The company, Hunter and Macdonald are accused of false and misleading conduct.
ASIC wants the company and the two executives to pay pecuniary penalties. It also wants Hunter and Macdonald banned from managing corporations for a period to be determined by the court.
GetSwift on Monday irrefutably denied the allegations made by ASIC and said it will vigorously defend the proceedings. In response, the shares plunged 31.82 per cent to a two-year low of 30¢.
As well as defending itself against ASIC, GetSwift is defending itself against three separate class actions. These are the subject of an appeal to the High Court after the Federal Court said all three should be rolled into one.
Thanks to a boom-time capital raising before the Financial Review blew the whistle on its disclosure practices, GetSwift has about $87 million in cash and cash equivalents in the bank.
It can afford to fight the class actions for as long as necessary and delay an inevitable settlement. Given the usual legal tactics and court delays it could be four years before there is a final settlement.
Of course, class actions only go ahead if sufficient shareholders back them. Otherwise the class action financiers walk away. Shareholders may not wish to back a class action for fear it might kill the company before it reaches its full potential.
This is why the ASIC civil action is potentially a game-changer. In the post-Hayne world ASIC could be able to push through a judgment much faster than the usual two to three years.
If ASIC wins its case that might influence shareholders to either back a class action or force the independent directors to think about winding up the company. Repaying all the money in the bank back to shareholders could be smarter than spending it all on lawyers.
After all, what is the use of a technology company that cannot employ as “officers” of the company the two big brains behind its success? All the more reason to fight to the death.
One critical factor that must be on the minds of the independent directors is the fact that the company is burning about $2 million in cash each month. Legal bills could see the cash burn increase despite the rapid increase in revenue from selling the GetSwift logistics software.
TONY BOYD
from Just News Viral https://ift.tt/2SXlVMw
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