According to the legal news service Law360, a £7.2 million lawsuit has been brought by Grantham Capital, the owners of UK retreader Vacu-Lug, against 37 individuals, who Grantham accuses of fraudulently manipulating the financial records it used to base its offer to buy the company in 2018.
Vacu-Lug Fraud Case Initiated
In its High Court claim Grantham asserts that Vacu-Lug’s directors and other shareholders artificially inflated its 2017 reported profits to misrepresent how much money the company had, knowing that Grantham would be relying on those accounts when it offered to buy the company.
The claim says that although Grantham was told the value of Vacu-Lug was £9 million as of July 31, 2018, the company in fact had no value because of its low profit figure and declining performance.
Grantham claims it should be able to rescind the acquisition deal and get back the £7.2 million it has paid so far, in addition to damages to cover the costs it claims it has incurred in reconstructing Vaculug’s financial records and identifying the alleged fraud.
The four key defendants in the case are John Langham, Alison Collins, Timothy Hercock and John Parsons, who were directors of Vacu-Lug. The remaining 33 defendants are warrantors to the draft share price agreement which lies at the heart of the suit. At the time of writing, the defendants had yet to file a defence to the claim.