Litigation Capital Management Ltd (AIM:LIT) shares fell 16% on Monday after the company scrapped a major class action investment and launched a strategic review of its future.
The AIM-listed litigation funder said it had terminated its backing for a case brought by commercial fishermen against Gladstone Ports Corporation in Australia, over alleged contamination from dredging in 2011–12.
The settlement, which requires court approval next month, includes a payment to Gladstone, but this will be covered by insurance.
LCM said it would write off the full A$30.8 million (£15 million) invested, although it is seeking to recover part of the outlay by pursuing the law firm originally involved.
Chief executive Patrick Moloney said the decision was “challenging but necessary” after flaws emerged in the preparation of the claim.
The company has appointed Luminis Partners to advise on its strategic review, which will assess options for the business after a string of adverse outcomes.
LCM is also awaiting a judgment on a separate UK case into which it has invested £9.9 million, as well as a decision on whether it can appeal an earlier arbitration loss.
The stock dropped 6.24p to 32.76p.