A judge has given his blessing to a $49.7 million settlement of two class actions that alleged infant food maker Bellamy’s misled investors about its China growth strategy and declining market share in Australia.
Federal Court Justice Jonathan Beach signed off on the deal on Friday, and also approved a funding equalisation order that will give funders Omni Bridgeway and Investor Claims Partners a commission worth 28.99 percent of the proceeds.
A common fund order made in the cases in 2018, which allowed the funders a cut of up to 30 percent, is no longer operative after the High Court’s ruling putting an end to CFOs at the early stages of class actions.
Justice Beach in December invited the applicants to consider seeking a post-settlement common fund order, saying the High Court did not rule them out, but the applicants told the court Friday they had opted for a funding equalisation order.
The judge also approved $7.1 million in legal costs and disbursements incurred by law firms Maurice Blackburn and Slater and Gordon, $2.5 million more than the costs Bellamy’s unsuccessfully sought to limit the applicants to.
Slater and Gordon lawyer Idil Mohamud said Friday the settlement funds were expected to be distributed to class members in May.
“We are pleased with the Court’s finding that the terms of the settlement, as negotiated by Slater and Gordon, are in the best interests of investors,” Mohamud said.
Lawyerly has reached out to Bellamy’s for comment.
Bellamy’s reached the settlement in November last year, after suffering several setbacks during the course of the litigation. In addition to its failed bid to cap costs at $4.5 million, the company lost an early application to stay one of the competing class actions.
In dismissing the cost-capping bid in August last year, the Full Federal Court said concerns about duplicative costs in multiple class actions were better addressed by case management decisions aimed at cutting excessive expense, not by limiting the amount lawyers representing group members could spend.
The class actions, brought in 2017, followed Bellamy’s $500 million share price tumble in 2016. They alleged Bellamy’s misled the market about the company’s China strategy and left investors in the dark about its declining infant formula market share in Australia in 2016.
On December 2, 2016, Bellamy’s announced that expected revenue for the 2017 financial year would be $240 million, down from a forecast of $350 million. The company’s shares were placed in a voluntary trading halt until January 2017.
Late last year the Federal Government approved the takeover of Bellamy’s by Hong Kong-based dairy firm China Mengniu Dairy Company.
The class actions are represented by Jonathan Kirkwood, instructed by Maurice Blackburn and Slater and Gordon.
Bellamy’s is represented by Michael Garner, instructed by MinterEllison.
The cases are McKay Super Solutions Pty Ltd v Bellamy’s Australia Limited and Peter Anthony Basil v Bellamy’s Australia Limited.