Watchstone Group, formerly Quindell, faces High Court battle with Slater & Gordon
09:00 14 Jun 2017
Watchstone Group, formerly known as Quindell, has denied claims of fraudulent misrepresentation and breach of warranty in Slater & Gordon's acqusition
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Watchstone's shares are under pressure today
Insurance claims manager Watchstone Group plc (LON:WTG) has confirmed that it is facing a High Court trial brought by the Australian law firm that purchased its professional services business in 2015.
Shares fell 6.43% to 131.0p in early trading on the news.
The law firm, Slater & Gordon, said its UK subsidiary has served a claim against Watchstone, formerly known as Quindell, over its ill-fated acquisition of the business.
Slater & Gordon is seeking up to £637mln in damages on allegations of fraudulent misrepresentation and breach of warranty in the deal.
The legal group paid £673mln to buy the business from Quindell and announced an equity raising to fund the deal. Shortly afterwards, the UK’s Serious Fraud Office kicked off an investigation into Quindell’s accounting practices.
Slater & Gordon reported a net loss of U$425mln for the last six months of 2016, reflecting an A$350.3mln impairment charge related to the acquisition.
The company announced its intention to file a claim in May, adding that it intends to divest itself of its remaining assets.
Watchstone has denied any wrongdoing, saying it refutes claims of “misrepresentation in the strongest terms and remains satisfied that neither the warranty claim nor a misrepresentation claim have merit and will defend such claims robustly if proceedings are brought”.
The firm has said that despite multiple requests, Slater & Gordon has “continuously declined to disclose key evidence in its possession which would be relevant to the merits and quantum of its purported claims”.
Watchstone said it “believes this evidence will be available to it in the event that SGH issues proceedings and it intends to seek disclosure of such information at the earliest possible opportunity”.
