Embattled Freedom Foods is facing a second class action, alleging shareholders were misled over a period of six years.
The company, which has a UHT milk factory in Shepparton, remains in voluntary suspension from the Australian Stock Exchange while it undergoes a recapitalisation which is due to be completed in April.
In the past seven months, Freedom Foods has lost chief executive officer Rory Macleod and chief financial officer Campbell Nicholas who resigned at the end of June, and sold its cereal and snack foods business to Arnott’s for $20 million.
Law firm Slater and Gordon filed a class action against Freedom Foods Group Ltd and its auditor, Deloitte, in late December, following the announcement of write-downs and adjustments to its balance sheet totalling $590 million.
The class action alleges eligible shareholders have claims against Freedom Foods and Deloitte as a result of acquiring shares between December 7, 2014 and June 24, 2020.
Freedom Foods announced to the ASX it had now been served with a second class action.
Law firm Phi Finney McDonald has lodged the class action backed by litigation funder Omni Bridgeway.
It alleges that over six years management of Freedom Foods capitalised certain day-to-day and other expenses that ought to have been immediately expensed, and failed to write-off quantities of expired or obsolete inventory.
It also alleged that Freedom Foods’ long-standing auditor Deloitte Touche Tohmatsu (Deloitte) failed to correct these accounting errors in its conduct of the audit of Freedom’s annual and half yearly reports over that period.
Freedom Foods has appointed Arnold Bloch Leibler to defend the action.