Chill Brands Group PLC (LSE:CHLL, OTCQB:CHBRF) told investors that its new board, which took the reins on 4 June, has launched an investigation into the actions of former chief commercial officer Antonio Russo and chief operating officer Trevor Taylor who recently exited the business.
The new Chill Brands board was instilled after shareholder requisition and a shareholder vote at an EGM on 4 June.
In a stock market statement, Chill Brands said that following its initial review of the company it discovered that Taylor and Russo during the month of May took preparatory steps to transfer the registration of the Chill.com domain from the company to themselves.
The company added that Taylor and Russo did not have board authorisation to do so, and that the transfer of the domain registration was completed on 31 May 2024, without board authority or knowledge.
It noted that a meeting of the prior board was held on 3 June, a day before the EGM, in which a resolution was proposed by Trevor Taylor for the transfer of the domain and certain of the company's trademarks to Chill North America LLC, an entity controlled by Antonio Russo, and a leaseback arrangement was proposed.
Chill Brand said that no final documents in executable form were presented to the board and a vote of approval was completed, despite the objections of the company's sole independent non-executive director. It was not disclosed to the board that the domain had already been transferred.
The company said that there is currently no interruption to the business carried out by Chill Brands on the domain.
Today, the company said that the company’s shares were suspended on 3 June, prior to the management changes, at the company’s request because the company was unable to provide update to the market on it trading.
“The board, based on the initial findings of its review, now believes that any announcement or trading update issued by Chill Brands prior to the suspension of trading in the company's shares would have had to disclose the transfer of the company's major asset to an account controlled by Antonio Russo,” it said in the statement.
Moreover, it told investors that has also discovered that, on 3 June 2024, payments totalling almost $400k were made from the bank account of the group's US subsidiary to Antonio Russo and Trevor Taylor's personal US bank accounts.
“These payments were not approved by the board and were not notified to the board at their meeting held on the day,” it added. “The company's board is seeking a proper explanation from Trevor Taylor and Antonio Russo for these payments, and the recovery of these funds through all legal means available.”
Chill Brands said it is now examining the involvement of certain advisers appointed by Russo and Taylor in facilitating these activities.
The company today said that its board cannot yet provide a full trading and financial update and will not seek a restoration of trading of the company's ordinary shares until it is in a position to provide such an update.
“We are totally shocked by the extent of destructive behaviour and actions of Mr Taylor and Mr Russo. It is evident that they have not acted in good faith and their actions have been motivated by self-interest rather than for the benefit of the company or its shareholders,” non-executive chair Harry Chathli said.
“The company has commenced an investigation to uncover if any professional advisers or persons had assisted them in their actions to defraud the business.
“Shareholders can be assured that the current board will work unceasingly to ensure restoration of trading of shares and seek to regain the positive momentum achieved in the year to 31 March 2024.”