SurfStitch all at sea as administrators are called in
The inexorable slide of online retailer SurfStitch hit a milestone today with the directors calling in adminstrators to oversee company affairs. The company says it has "reluctantly made the appointment due to several significant external challenges including two Class Actions, protracted litigation, and an ASIC investigation."
With its shares already weak, SurfStitch has deemed their situation untenable, the combined effect creating a "high level of uncertainty impacting the companies trading position."
With insolvency issues looming the SurfStitch board has called in administrators, FTI Consulting. The announcement only concerns SurfStitch's listed and holding company, its online businesses - including Magic Seaweed, Stab, Swell and Surfdome - will continue trading as normal.
FTI Consulting, said they'll "work closely with the operating businesses to preserve value for stakeholders."
SurfStitch shares have been suspended since late May while the company considered the implications of a $100 million class action launched by aggrieved shareholders. Law firm Quinn Emanuel is running the class action on behalf of shareholders, while another law firm, Gadens, run a concurrent class action.
As well as two class actions, major shareholder Crown Financial has taken legal action against SurfStitch over a failed content sharing deal. The Australian Securities and Investments Commission is also investigating Surfstitch's disclosures in connection with the content sharing deal.
SurfStitch listed at $1 in late 2014 and was trading at a record high of $2.09 in November 2015. It shares had fallen 90 per cent to 22¢ by June 2016 following three profit warnings. The stock closed at 6.8¢ before being suspended.