Story image

Former Dick Smith directors and execs facing legal action

20 Mar 17

Dick Smith directors and executives in the firing line again after receivers Ferrier Hodgson reportedly filed legal action against them last week, with a damages claim in the tens of millions of dollars.

Reports say a statement of claim was filed in NSW’s Supreme Court last Friday, claiming a breach of duty by eight key directors and executives.

The Australian Financial Review says the statement alleges the directors, including Dick Smith director and Anchorage consultant Bill Wavish, Dick Smith chairman Rob Murray and Anchorage managing director Phil Cave, and executives including former chief executive Nick Abboud, failed to put in place adequate systems in relation to rebates and inventory management.

A report by administrators McGrathNicol last year noted poor inventory purchasing decisions, with the company making decisions based on rebate opportunities rather than customer demand, as one of the factors leading to the company’s demise.

AFR says the statement of claim alleges company earnings were inflated by its rebate maximising strategy.

The strategy ultimately resulted in the company being left holding large quantities of unsaleable goods and allegedly artificially inflated its profits by recording rebates as profit.

Dick Smith’s collapse in early 2016 saw the closure of 362 stores across Australia and New Zealand with the loss of nearly 3000 jobs after the company was placed into voluntary administration and receivership.

The company had been through troubled times, with ‘restructuring’ as far back as March 2015 and a $60 million inventory write-down.

Its demise sparked a number of investigations into the business, with former managers and directors forced to front the NSW Supreme Court last year.

Anchorage Capital bought Dick Smith in 2012 for AU$20 million, floating in a year later with a market capitalisation of $520 million before selling their remaining 20% stake a year later – walking away with a handsome profit from the deal.

A number of insurers which provided cover for the directors and executives, are also facing action according to the reports.

Gartner names LogRhythm leader in SIEM solutions
Security teams increasingly need end-to-end SIEM solutions with native options for host- and network-level monitoring.
NBN Co rolls out 'optimised' wholesale business bundles for ISPs
“We recognise some businesses are on nbn powered plans that have not been optimised for their needs," says Paul Tyler.
JASK prepares for global rollout of their AI-powered ASOC platform
The JASK ASOC platform automates alert investigations, supposedly freeing the SOC analyst to do what machines can’t. 
Cisco dominates record-high Ethernet switch & router markets
While the market is flourishing, it’s tough-going as Cisco has increased its majority share of the pie.
SAP provides partners with free access to their cloud platform
“Now that over 3,700 SAP partners have joined our cloud strategy, the free resources will help them accelerate application development."
Gartner names Proofpoint Leader in enterprise information archiving
The report provides a detailed overview of the enterprise information archiving market and evaluates vendors based on completeness of vision and ability to execute.
WatchGuard appoints new channel distributors in A/NZ
The appointments will enable WatchGuard to expand its regional channel reseller footprint.
Tensions on the rise after Huawei CFO arrest
“Recently our corporate CFO, Meng Wanzhou, was provisionally detained by the Canadian authorities on behalf of the United States of America."