Many of us have been waiting for a substantial cash injection and special dividend from the settlement of the J&J Mesh class action, but I am increasingly worried that it will not manifest, and instead, there might even be a debt.
Shine are trying to recover $64m, which is $38m in fees and disbursements, as well as $26m in interest. [Note: they have already received $41M towards costs a couple of years ago]
Assuming of the $38m, $10m is disbursements. This would mean that Shine’s best case scenario is to get $28m in cash for themselves, and $36m ($10m disbursements & $26m interest) which they will need to pay out to whoever funded the disbursements. The $36m debt (which is probably $40m now) to the disbursement funder is a cost that must be repaid by Shine regardless of what is recovered from the Court. The problem is, Shine is unlikely to recover all their costs, or any of their interest. In the hearing in December, the judge said that he was against Shine recovering the interest on money borrowed to run the cases. This is a real concern.
If we assume that Shine does not recover any of the interest, about 80% of their costs ($22.4m) and 100% of their disbursements ($10m), then they will recover $32.4m. If they recover $32.4m, but owe the disbursement funder $36+m, then Shine will not have a cash injection, but will instead be left with a debt of several million dollars.
And then there is the settlement administration. On 9 September Shine said that “Administration of individual claims may now proceed, which is expected to take several years, resulting in positive revenue and cash from FY23.”
Firstly, they should know that administration cannot proceed until the settlement is approved AND they have been appointed the administrators.
Secondly, there is going to be no revenue and cash for Shine from the administration, because it does not look like Shine will be the administrators. Shine asked for $35m for settlement administration work, but thought that was too expensive and sent the administration out for tender. Nearly 20 businesses tendered for the administration work, and all of them cheaper than Shine. It looks like the judge is going to run the tender again, but we can safely assume that Shine won’t get it.
I hope I am wrong, but I cannot see how Shine is going to have any positive cash from the final J&J Mesh orders. I feel like I have been misled, and that I have been holding my breath for something which was never coming.
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