LI-Cycle Holdings Corp.

Ticker: LICY

Class Period Start: 02/16/2021

Class Period End: 03/23/2022

Registration Deadline: 06/20/2022

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A securities class action has been filed in the USDC – E.D.N.Y. against Li-Cycle Holdings Corp. f/k/a Peridot Acquisition Corp. (LICY) lawsuit on behalf of purchasers of the securities of Li-Cycle Holdings Corp. between February 16, 2021 through March 23, 2022.

On August 10, 2021, Li-Cycle merged with special purpose acquisition company, Peridot Acquisition Corp.

On March 24, 2022, Blue Orca Capital published a report which described Li-Cycle as a “near fatal combination of stock promotion, laughable governance, a broken business hemorrhaging cash and highly questionable Enron-like accounting.” The report also alleged, among other things, that Li-Cycle had “diverted $529,902 in investor capital to the family [] of its founders through a series of highly questionable related party payments,” and that its “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.” The Report further stated that the Company’s largest customer, Traxys, is not actually a customer, but a “broker or marketing partner that on-sells Li-Cycle’s black mass to end buyers,” and that “not only is Traxys not the end buyer, but the revenue recognized by Li-Cycle is merely Li-Cycle’s initial estimate of the price of the product it expects to receive from the end customer once the final deal is complete.”

On this news, Li-Cycle’s stock fell $0.47, or 5.6%, to close at $7.93 per share on March 24, 2022, thereby injuring investors.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that:

  • Li-Cycles largest customer, Traxys North America LLC, is not actually a customer, but merely a broker providing working capital financial to the Company while Traxys tries to sell Li-Cycles product to end customers;
  • the Company engaged in highly questionable related party transactions;
  • the Company’s mark-to-model accounting is vulnerable to abuse and gave a false impression of growth;
  • a significant portion of the Company’s reported revenues were derived from simply marking up receivables on products that had not been sold;
  • the Company’s gross margins have likely been negative since inception;
  • 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
  • as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.

If you suffered a loss on your investments or would like to inquire about joining an action to recover your loss under the federal securities laws, please complete the form below.

An attorney will contact you at no cost to provide you information about joining the action and answer your questions. Please note that submission of this form does not by itself form an attorney-client relationship nor does filing out this form mean you have joined any lawsuit.

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