Li-Cycle Holdings Corp.
The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Eastern District of New York on behalf of those who acquired Li-Cycle Holdings Corp. (“Li-Cycle” or the “Company”) (NYSE: LICY) publicly traded securities from February 16, 2021 through March 23, 2022, both dates inclusive (the “Class Period”). Investors have until June 20, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Li-Cycle is an industry leader in lithium-ion battery resource recovery and the leading lithium-ion battery recycler in North America. On August 10, 2021, Li-Cycle merged with Peridot Acquisition Corp. (“Peridot”), a special purpose acquisition company (“SPAC”) also called a blank check company.
On March 30, 2021, the Company filed with the SEC a current report on Form 8-K which was signed by Defendant Engle. The 8-K included, in pertinent part, a press release dated March 30, 2021 which announced the business combination of Qell Acquisition Corp. and Lilium GmbH (the “Merger Announcement Press Release”).
On March 24, 2022, 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.” On this news, Li-Cycle’s share price declined by $0.47 per share, or approximately 5.60%, from $8.40 per share on March 23, 2022 to close at $7.93 per share on March 24, 2022.
The lawsuit alleges throughout the Class Period, the Registration Statement was materially false and misleading and omitted to state 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.