Cape Town - Beleaguered Stellenbosch-headquartered retail giant Steinhoff is now facing a German investor lawsuit, after losing more than 85% of its market capitalisation in two weeks.
The suit was filed by German law firm TILP in Frankfurt on Tuesday.
In a media statement TILP said that since December 5 Steinhoff has lost over €10bn in market capitalisation, and as a result its shares were now trading as “penny stocks”.
The firm said that it was of the legal opinion that Steinhoff made itself liable for damages after providing its shareholders with incomplete market information.
This after Steinhoff said on December 6 that it had red-flagged “accounting irregularities requiring further investigation” in its books, and retained PwC to conduct an independent investigation.
Following the announcement, the global furniture retailer's share price tanked.
The quick resignation of its CEO Markus Jooste, and later of its board chairperson Christo Wiese have not yet been able to stop the decline.
Its 2017 audited results have now been delayed, and it has said its 2016 results cannot be relied on either.
‘Play by the rules’
TILP noted that, as Steinhoff was listed on the Frankfurt Stock Exchange, it fell under German financial rules.
Andreas Tilp, the managing director of TILP, said in a statement that Steinhoff was aware it should have adhered to the “rules of the game”.
“Incorrect financials to not happen by accident”, he added.
Steinhoff did not immediately reply to a request for comment.
On Tuesday it met with banks and lenders in the hopes of assuring them it is fundamentally a sound company. It has not yet provided an update on the outcome of the meeting.
The TILP lawsuit is not the first initiated against Steinhoff in the past month.
As Bloomberg previously reported, Andreas Seifert has opened civil suits against Steinhoff in Germany, the Netherlands and his homeland of Austria through his OM Handels.
UK-based litigation firm Innsworth, meanwhile, has said that it is "contemplating funding proceedings against Steinhoff International" on the grounds that it allegedly overstated its assets, issued misleading statements and kept investors in the dark about its true financial situation.
* Update: December 20 at 13:54: this article was updated to include information about contemplated litigation by Innsworth.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER