Securities Litigation Partner James (Josh) Wilson Encourages Investors Who Suffered Losses Exceeding $100,000 In Li-Cycle To Contact Him Directly To Discuss Their Options
NEW YORK, NY - 
(NewMediaWire) - May 09, 2022 - Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Li-Cycle Holdings Corp. (“Li-Cycle” or the “Company”) (NYSE: LICY) and reminds investors of the June 20, 2022 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If you suffered losses exceeding $100,000 investing in Li-Cycle stock or options between February 16, 2021 and March 23, 2022 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310). You may also click here for additional information: www.faruqilaw.com/LICY.
There is no cost or obligation to you.
Faruqi & Faruqi is a leading minority and Woman-owned national securities law firm with offices in New York, Pennsylvania, California and Georgia.
As detailed below, the lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) Li-Cycle’s largest customer, Traxys, is not actually a customer, but merely a broker providing working capital financial to the Company while Traxys tries to sell Li-Cycle’s product to end customers; (2) the Company engaged in highly questionable related party transactions; (3) the Company’s mark-to-model accounting is vulnerable to abuse and gave a false impression of growth; (4) a significant portion of the Company’s reported revenues were derived from simply marking up receivables on products that had not been sold; (5) the Company’s gross margins have likely been negative since inception; (6) the Company will require an additional $1 billion of funding to support its planned growth (which is a figure greater than the Company raised via the merger); and (7) as a result, Defendants’ public statements were materially false and/or misleading at all relevant times.
On March 24, 2022, before market hours, market researcher Blue Orca Capital released a report on Li-Cycle (the “Report”), which described the Company as “a near fatal combination of stock promotion, laughable governance, a broken business hemorrhaging cash, and highly questionable Enron-like accounting.” Among other things, the Report alleged that the Company’s revenues are based on “an Enron-like mark-to-model accounting gimmick,” and that “Li-Cycle diverted $529,902 in investor capital to the family [] of its founders through a series of highly questionable related party payments.” The Report also alleged that the Company’s “cash burn is so severe and far above previous guidance” which “will require the Company to raise at least $1 billion . . . in large part by massively diluting current shareholders.”
With regard to the related party transactions, the Report alleges that “Despite hemorrhaging cash and likely requiring multiple near-term infusions of capital, Li-Cycle diverted half a million in investor capital to the family entourage of its founders through a series of highly questionable related party payments.” For example, the Report alleges that Li-Cycle “paid an aggregate $167,553 to Ashlin BPG Marketing (“Ashlin”), a Canadian leather goods producer run by Ashok Kochhar, a family member of Li-Cycle’s president and CEO, Ajay Kochhar” for “marketing items and employee gifts.” According to “Ashlin’s website, the most expensive item is $379.31 [but] Li-Cycle spent 226x this amount buying employee gifts and marketing trinkets.” The Report questioned how “a startup that is hemorrhaging cash and struggling to get the necessary capital to launch its business [could] spend tens of thousands of dollars on cheapwallets and bags.” Moreover, the Report alleges that “Li-Cycle also spent C$4,500 a month to share a lease with Ashlin in Mississauga, Ontario” even though “one of the units in the same building was recently leasing for C$1,200 per month.” According to the Report, this meant that “Li-Cycle [] likely overpaid for a lease from the CEO and/or his family.”
The Report also alleged that the Company’s mark-to-model accounting, which it described as “Enron-esque,” was vulnerable to abuse and gave a false impression of growth.
On this news, Li-Cycle shares fell $0.47 per share, or approximately 5.6%, to close at $7.93 per share on March 24, 2021, on unusually heavy trading volume, damaging investors.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Li-Cycle’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
Attorney Advertising. The law firm responsible for this advertisement is Faruqi & Faruqi, LLP (www.faruqilaw.com). Prior results do not guarantee or predict a similar outcome with respect to any future matter. We welcome the opportunity to discuss your particular case. All communications will be treated in a confidential manner.
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