Fast-fashion retailer Boohoo is facing a potential £100m lawsuit from investors after modern slavery allegations slashed more than £1bn from its value.
Boohoo is being “targeted” by City lawyers eyeing compensation for shareholders who suffered losses as a result of allegations of forced labour across Boohoo’s factories in 2020, The Telegraph has reported.
The newspaper reported that sovereign wealth funds and local councils are among the group of investors “plotting” the lawsuit.
The modern slavery allegations relating to Boohoo’s Leicester factories were first reported by The Sunday Times and later verified by an independent review conducted by barrister Alison Levitt KC.
Levitt found that “allegations about poor working conditions and low rates of pay in many Leicester factories are not merely well-founded but substantially true”.
She added: “Boohoo’s monitoring of its Leicester supply chain was inadequate and this was attributable to weak corporate governance.
“Senior Boohoo directors knew for a fact that there were very serious issues about the treatment of factory workers in Leicester and, whilst it put in place a programme intended to remedy this, it did not move quickly enough.”
The allegations are reported to have slashed £1.1bn off Boohoo’s market value, which is “the basis for investors’ bid to claim compensation”.
While a claim has not been filed against the fashion giant to date, the class action could “reach the High Court if a settlement is not reached”.
Boohoo is said to have appointed lawyers at Herbert Smith Freehills to “fend off the potential litigation”.
A Boohoo spokesperson told The Telegraph: “A formal claim relating to this matter has not been made. If any proceedings are issued in relation to this matter, they will be robustly defended.”
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