Li-Cycle Holdings Corp.

  • Active

Investigation
03/24/2022

Initial Lawsuit
04/19/2022

Lawsuit Progression
06/21/2022

Investigation

  • Continous Holding
    February 16, 2021 to March 23, 2022
  • Proposed Claim
    Securities Violation

This investors investigation follows the Blue Orca Capital short report alleging marking up its receivables’ value through “an Enron-like mark-to-model accounting gimmick.”

Did the company mislead shareholders regarding its accounting? Did the company hide the reality of its financials with a massive stock promotion and “highly questionable accounting”?

Short research firm Blue Orca Capital alleges so.

This post is open for investors to gather facts, and findings and track their exposure to related lawsuits. We invite investors and shareholders to contribute to this investigation for their own benefit, add events to the factual timeline below and vote on events’ pertinence.

A lawsuit was subsequently filed. We will update this post as it unfolds.

Main Event

Alleged "Accounting Gimmick"

03/24/2022

Research Report (Short)

Blue Orca Capital publishes a short report, alleging that Li-Cycle uses “Enron-like” mark-to-model accounting gimmicks with the mark-up of its receivables’ value,  diverted investors money, and its chairman is a serial penny stock promoters sanctioned by Canadian regulators.

“We are short Li-Cycle Holdings Corp. (“Li-Cycle” or the “Company”), a battery recycling SPAC trading at 96.8x LTM revenues on the promise of a low cost, low capital expenditure recycling model. But such promise is a fiction. In our opinion, Li-Cycle is a near fatal combination of stock promotion, laughable governance, a broken business hemorrhaging cash, and highly questionable Enron-like accounting.”

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close Previous close Price variation Percentage variation
$7.93 $8.4 $-0.47 -5.6%
See more on Factual Timeline

Initial Lawsuit

First Complaint - 04/19/2022

A Li-Cycle shareholder filed a federal securities class action on behalf of a class consisting of all persons and entities other than defendants who purchased or otherwise acquired the publicly traded securities of the company between February 16, 2021 and March 23, 2022, both dates inclusive.

  • Filing Date
    04/19/2022
  • Class Period
    02/16/2021 to 03/23/2022
  • Transgression
    Securities Violation
  • Filing Firms
    The Rosen Law Firm, P.A.
  • Case Title
    Barnish v. Li-Cycle Holdings Corp. et al
  • Docket Number
    1:22-cv-02222
  • Court
    New York Eastern District Court
  • Free File
    Complaint

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors that:

(1) Li-Cycle’s largest customer, Traxys, is not actually a customer, but merely a broker providing working capital financial to the company while Traxys tries to sell Li-Cycle’s product to end customers;
(2) the company engaged in highly questionable related party transactions;
(3) the company’s mark-to-model accounting is vulnerable to abuse and gave a false impression of growth;
(4) a significant portion of the company’s reported revenues were derived from simply marking up receivables on products that had not been sold;
(5) the company’s gross margins have likely been negative since inception;
(6) the company will require an additional $1 billion of funding to support its planned growth (which is a figure greater than the company raised via the merger); and
(7) as a result, defendants’ public statements were materially false and/or misleading at all relevant times.

Defendants

  • Company
    Li-Cycle Holdings Corp. f/k/a Peridot Acquisition Corp.
  • Chief Executive Officer
    Ajay Kochhar
  • Chief Financial Officer
    Bruce MacInnis

Lawsuit progression

  • Docket Number
    1:22-cv-02222
  • Court
    New York Eastern District Court

The lead plaintiff deadline has passed, we will update this page as the lawsuit progresses.
Last event retrieved on 10/07/2022.

[stockdio-historical-chart symbol=”LICY” stockExchange=”NYSENasdaq” width=”500″ height=”330″ motif=”blinds” palette=”humanity” includeVolume=false]

Factual Timeline

More

More Cases & Investigations
Privacy Policy
© Copyright 2024 Brios Services LLC
Terms & Conditions