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British staffing specialist Healthcare Locums has admitted that court proceedings against the firm in the US have commenced again, after the recruitment company prematurely reported in June that legal claims had been dropped in New York.
Chairman Peter Sullivan said the “legal proceedings are wholly without merit.” But since the news spread amongst shareholders, the company’s shares dramatically dropped by over -15% this morning to 2.50 pence.
Although the firm was dismissed from the US District Court for the Southern District of New York, proceedings have now been filed against HCL and former directors Diane Jarvis and Alan Walker in the Supreme Court of the State of New York.
But it seems like there will be no further legal action in the US against Kate Bleasdale, the high-profile founder of HCL who recently lost an unfair dismissal case against her previous employer in the UK. HCL said in a statement that “she was released from the former proceedings in the District Court by the Plaintiffs without prior explanation or reference to the Company.”
The staffing firm and the former directors are accused of misrepresenting its profitability and accounting practices. The proceedings have been filed by various hedge fund investors, including Permian Master Fund, Permian Investments Partners, Arundel Capital, Arundel Long Fund LP, Arundel Hedge Fund LP, Privet Capital, LLC and Flinn Investments.
HCL said that “the Summons and Complaint have not as yet been served on Healthcare Locums plc. However, the Company will update shareholders shortly.”
The Financial Times recently reported that “the claims could threaten [the firm’s] solvency.”
Last year, the firm increased revenue by +47% to £227.1 million although Mr Sullivan said that 2011 had been “the most challenging year” in the history of the firm, following the discovery of accounting irregularities and lower than expected financial performance.