SLATER and Gordon's UK subsidiary has confirmed it will be taking action against Watchstone Group, the company responsible for selling Slater and Gordon (ASX: SGH) its professional services division Quindell in 2015.
The embattled firm intends to sue Watchstone for fraud in the High Court of England and Wales for approximately £600 million in damages over the coming weeks.
The claim involves serious allegations that Watchstone and its senior managers made "fraudulent misrepresentations" concerning the purchase of Quindell.
In a release, Watchstone told the market that Slater and Gordon's claim was "groundless" and that it is ready to fight any legal proceedings which may ensue.
"[Slater and Gordon] intends to make a claim for a total amount of approximately £600m on the basis that but for fraudulent misrepresentation it would not have entered into the transaction at all," said Watchstone in a release to the market.
"A groundless claim for fraudulent misrepresentation was dismissed by the independent barrister in respect of the warranty escrow process relating to the sale of the Professional Services Division in November 2016.
"Watchstone denies any 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."
Watchstone also says Slater and Gordon hasn't yet supported its accusations by disclosing relevant evidence.
"Despite multiple requests, SGH has continuously declined to disclose key evidence in its possession which would be relevant to the merits and quantum of its purported claims," says the company.
"Watchstone 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."
Ever since Slater and Gordon purchased Quindell, the company has been plagued by consequential legal troubles resulting in an unprecedented share price drop which has shaved 98 per cent off its total market cap value.
Not only has the company been forced to enlist an army of secondary debt buyers in order to stay afloat, it is also the subject of a class action lawsuit brought by rival firm Maurice Blackburn on behalf of aggrieved SGH shareholders.
Recently, Slater and Gordon's new lenders threw the company a $40 million lifeline to help restructure its battered capital facility.
While Slater and Gordon's stock is still a far cry from what it was in 2015, for the first time in a long time SGH shares spiked today by 13.6 per cent to trade at almost $0.10 (as of 10:53am AEST).
Watchstone Group's shares (LON: WTG) on the London Stock Exchange have also dropped by 10 per cent (as of 10:53am AEST).
Business News Australia
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