Embattled listed tech startup GetSwift has found itself in further strife, with Fairfax reporting a class action lawsuit filed against the company has been expanded to include market statements made by the company about possible arrangements with Amazon and YUM! Foods in 2017.
A class action lawsuit was filed against the company by firm Squire Patton Boggs on February 20, alleging “misleading and deceptive conduct” against the company and its founder and director Joel MacDonald, and alleging GetSwift breached its continuous disclosure obligations.
The lawsuit, estimated by Squire Patton Boggs to have a claim size exceeding $300 million, was filed after an investigation by Fairfax alleged the company had routinely failed to update the market on lost contracts, including ones with Commonwealth Bank and Fantastic Furniture.
GetSwift denied the claims, but the company’s shares were put in a trading halt for almost three weeks. The startup also confirmed in February the Australian Securities and Investments Commission (ASIC) has served the startup a notice to produce documents.
The class action claim, which Getswift will reportedly contest, has now been expanded to include the company’s statements from December last year around possible deals with retail giant Amazon and YUM! Foods, the operator of Pizza Hut and KFC in Australia. At the time, little detail was supplied about the nature of the deals.
The expansion of the claim is reportedly so another competing class action does not establish itself with a broader scope. GetSwift also made statements from in 2017 promising it would only update the market on executed contracts that were “secure, quantifiable and measurable”. This claim was then followed up with one on February 19 this year which said only 50% of GetSwift’s enterprise clients were producing revenue.
“This leaves GetSwift with serious questions to answer as to why a number of contracts were announced when they had not progressed beyond the trial stage. The announcements relating to Fruitbox and CBA indicated to the market that significant revenue would be generated from those contracts,” Squire Patton Boggs states.
GetSwift’s shares are currently trading at 50c, down from $3.66 in early January this year.