Fired employees and investors are suing collapsed Chinese grocery delivery company Missfresh and Wall Street underwriters, who listed its shares in a $300 million bid in New York last year, over unpaid salaries and alleged violations of securities laws.
Missfresh pioneered fast food delivery in China, raising more than $1 billion in cash from investors including tech-focused funds managed by Tigers global and Goldman Sachs to reach a $3 billion IPO valuation.
Executives claimed their mini-stores and pink-clad drivers could make the 30-minute grocery delivery profitable, but the company has been hampered by Beijing’s crackdown on the tech sector. slowdown in economic growth in China and investors’ waning appetite to fund its losses.
To The money ran out last week and laid off most employees, Missfresh’s app stopped taking orders in Beijing as of Tuesday. The company’s Nasdaq-listed shares have fallen to 10 cents from last June’s trading price of $13 a share.
Hundreds of Missfresh employees have gone to labor arbitration courts in Beijing and Shanghai to sue the company for unpaid wages and lost severance pay guaranteed under Chinese labor law.
Missfresh has failed to pay mandatory health insurance and other benefits for its employees since May and still owes salaries from June and July, several employees told the Financial Times.
“I think the chances of getting my salary back are extremely slim,” said a former administrator surnamed Hu. “But I will go to arbitration anyway, that’s my right.”
Hu rushed to Missfresh’s Beijing office last week after hearing about the cash shortage. “They don’t pay me, so I take my computer,” Hu told the FT upon entering the office. Reached later by phone, Hu said they decided not to take the company computer.
Investors in the US have sued Missfresh, its executives and Wall Street banks for damages for taking the company public just over 12 months ago.
The lawsuit, filed in U.S. District Court in New York last month, alleges that Missfresh misrepresented financial numbers in its IPO prospectus and that underwriters, including JPMorgan and Citigroup, advertised its shares on the basis of an “erroneous prospectus” and would have sold.
The lawsuit alleged the insurers failed to conduct adequate due diligence and raked in millions of dollars in fees from the listing. During the Missfresh roadshow, the insurers “presented very positive information about the company,” the lawsuit alleges.
Plaintiff Juan Chen invested $68,000 in Missfresh stock in June and July last year and lost most of his money, the complaint said.
Missfresh said in an SEC filing last month that previous financial statements had excessive incomeincluding the quarter leading up to the IPO, and accused rogue employees of creating “questionable transactions” that boosted sales.
Last week, Missfresh said it intends to pay employees’ overdue salaries but has no money after a financing deal with a coal mining company fell through.
“I don’t have much hope of getting the money,” said a former employee at Missfresh’s fast-delivery unit. “I would be satisfied if founder Xu Zheng could share just one square meter of his villa with me.”
Unpaid suppliers occupying Missfresh’s Beijing office said they had not been able to locate CEO Xu in weeks.
Over the weekend, Xu told local media that “I have been busy with urgent matters for the past few days,” debunking rumors that he fled to Hong Kong.
Chen could not be reached for comment. The Rosen law firm representing Chen declined to comment, as did Citigroup and Xu. JPMorgan did not immediately respond to a request for comment.
Missfresh hit by lawsuits from investors and employees Source link Missfresh hit by lawsuits from investors and employees