Scandal-plagued dairy, cereal and nutritional products producer Freedom Foods is now the subject of a planned class action lawsuit, with claims likely to date back to 2014.
The shareholder action has been launched by law firm Slater and Gordon, rushing in to activate claims on behalf of shareholders who bought Freedom shares from December 2014.
Civil court action is only possible in relation to a maximum six year period prior to a claim being activated.
The class action alleges breaches of the Corporations Act, Australian consumer laws and the Australian Securities and Investment Commission Act, and is also against Freedom's auditor, Delloitte Touche Tohmatsu, which signed off on the food manufacturer's now discredited accounts dating back years.
Among other allegations Slater and Gordon claimed since 2014 Freedom had withheld material information about the company's true asset position, it breached continuous disclosure obligations and misled or deceived the market.
Freedom Foods is Australia's biggest long-life milk processor, a big player in the plant-based beverage sector, a significant lactoferrin producer for the nutritional health products market, and a fast growing name in health food snacks and breakfast cereals under the Freedom, Arnolds Farm, Messy Monkeys and Heritage Mill brands.
It has production sites in Melbourne and Shepparton in Victoria, and Sydney and the Riverina in NSW.
Last month, after a long forensic investigation of the company's books the company confirmed previous concerns about discrepancies in its stocks and earnings records, which culminated in a $590 million blowout in losses and asset writedowns for 2019-20.
Previous financial reports have also been revised, with 2018-19's $11.6m profit turning into a loss totalling almost $146m.
Chairman, Perry Gunner, who has flagged he will resign at next month's re-scheduled annual general meeting, said it had become clear some aspects of the culture within Freedom Foods were not in the best interest of all stakeholders.
In a letter to shareholders he said there was no disputing it had been a difficult year for the group.
"Freedom foods Groups shareholders and employees have a right to feel angry and frustrated," he said.
It was now clear the growth obtained by the company was not profitable growth in a number of its business divisions.
However, on the positive side, Mr Gunner noted revenue had grown annually in the past five years and was up 26 per cent to $580.2m for the year ending June 30.
Deloitte, which signed off on the past six years of audited financial statements, has conceded it has identified significant accounting regularities.
However the full extent of the unusual bookkeeping was not realised until Freedom's chief financial officer Campbell Nicholas and managing director Rory Macleod left in June and deep dive investigations were commenced by PwC.
Class litigation specialist Slater and Gordon has acknowledged the company disclosed some details of a difficult 2019-20 financial year in May and late June just prior to a share trading halt, but shareholders had been unable to respond since, especially to the significant material revealed in November.
Trading in Freedom's shares has been frozen for six months, but the stock is expected to be worth far less than the $3 they fetched when they last traded given the company's net tangible asset value has now been revalued at just 8.7 cents a share - down from almost $2/share early in the year.
Freedom, which is poised to announce a capital raising to cover its cost blowout, and potentially the sale of some processing assets, has seen the true value of its assets shrink from 235m a year ago to $61m after the accounts were re-evaluated.