Slater and Gordon has reached in principle conditional agreement to settle a series of class actions against the law firm.
A short time ago, Slater and Gordon shares were up 8% to $0.08.
The deal, settling all claims, was made through a mediation process facilitated by the Federal Court.
The company’s insurers will pay $32.5 million and Slater and Gordon’s lenders, now its majority equity holders, another $4 million.
“The conditional in principle settlement will also resolve any and all potential shareholder claims against the
Company and its directors and officers,” Slater and Gordon said in a statement.
The settlement still needs approval by the Federal Court.
Maurice Blackburn, one of Slater and Gordon’s major competitors, is acting for the class action by shareholders who bought shares between March 2015 and February this year.
The shareholders in the class action alleged there were problems within Slater and Gordon that extended beyond its acquisition in the UK of Quindell’s Professional Services Division.
Last month Slater and Gordon closed a deal with its lenders, leaving US-based private equity group Anchorage Capital in control of the law firm.
Slater and Gordon shares hit a high of $8.07 in 2015, valuing the world’s first stock exchange-listed law firm at $2.8 billion.
But they went on a steep slide because of the company’s underperforming UK business and the British government’s plans to limit compensation for road accidents.
In August last year, the company posted an annual loss of $1.017 billion, including a $879.5 million non-cash impairment against the value of goodwill in its UK business.
In February this year, Slater and Gordon posted a net loss of $425.1 million, including $350.3 million impairment charge against the value of UK assets.