SBS Insight: Season 2021 Episode 3 - Class Actions News And Current Affairs

For many people who suffer harm or losses because of corporate wrongdoing, a class action can be the only way to seek compensation. 

But what happens when what you get at the end is far less than you hoped or the settlement is eaten up by legal and funding fees?

Producer: Jodie Noyce Associate Producer: Jordan Osborne, Jennifer Luu.

Link to: SBS Video

$25M Dick Smith Holdings class action settlement approved but judge says "disappointing"

The $25 million settlement resulting from class actions launched against Dick Smith Holdings (DSHE Holdings), the entity remaining after the collapse of electronics retailer Dick Smith, and insurer Alliance, has been approved, but only a small portion will end up in the hands of shareholders.

The cases were launched after the collapse of the retailer in early 2016, along with the closure of its stores, which followed closely on from a $60 million inventory write-down revealed in late 2015.

A rebate-focused inventory buying policy was one of the main triggers of the company’s collapse, according to a subsequent creditors’ report.

It should be noted that online retailer Kogan.com purchased the Dick Smith online retail business in 2016, taking over from June that year. 

The online business is unrelated to Dick Smith Holdings, the entity at the centre of the class actions.

Two of three proceedings were brought against DSHE Holdings Ltd and Dick Smith’s then executive directors, Nick Abboud and Michael Potts, and its auditor, David White of Deloitte Touche Tohmatsu. 

The other action was brought against Allianz Australia Insurance.

Broadly, two of the proceedings were securities class actions, with the plaintiffs representing people or entities that had purchased shares in Dick Smith. 

These actions alleged misleading or deceptive conduct of Dick Smith, Abboud, Potts and Deloitte.

The proceedings settled in principle on 3 December 2020, with the settlement involving a payment by several defendants of a total amount of $25 million.

Now, Supreme Court of NSW justice James Stevenson has approved the settlement, which he described as “disappointing”.

Full story: ARN from IDG