This securities class action relates to the Defendants making representations during the Class Period that Just Energy Group Inc. had effective internal controls over financial reporting, that there were no misrepresentations in its relevant documents, and that in fiscal 2020 the Company would enjoy between $90-$100 million in free cash flow and between $200-$220 million in EBITDA.

Despite the Company’s repeated representations of material fact however, in a series of public corrective disclosures (i.e. storm warnings) released between July 23 through August 15, 2019 (the “Public Corrective Disclosures”), Just Energy Group Inc. revealed that:

1. During January 2019, the Company identified a deficiency in the design and operating effectiveness of certain internal controls related to certain account balances in certain markets as it applied to certain gross margin accounts in those markets: identifying a $14.2 million error in the opening accumulated deficit account;
2. Management identified consumer enrolment and non-payment issues, primarily in Texas;
3. Management identified an impairment of certain accounts receivable within the Texas market of approximately $45 to $50 million;
4. Management identified an impairment of certain accounts receivables within the U.K. market of approximately $74 million;
5. Based on the evaluation conducted by or under the supervision of the CEO and CFO in connection with the Company’s internal controls over financial reporting, it was concluded that the Company did not have effective controls and procedures because there were material weaknesses during the quarters ended December 31, 2018, March 31, 2019, and June 2019, management failed to effectively operate a control to capture appropriate expected credit loss rates to be reflected in the estimated allowance for doubtful accounts in Texas residential and U.K. markets; and
6. Due to the reclassification of the U.K. business and impairment, the Company was revising its 2020 base EBITDA down to $180 to $200 million and free cash flow guidance down to $50 to $70 million.

The Public Corrective Disclosures had the foreseeable effect of removing the artificial inflation in the Company’s stock price that had resulted from the aforementioned misrepresentations, causing Just Energy Group Inc.’s stock price on the TSX to diminish by over 60% in price and value, thereby causing damages to the Company’s shareholders.

On October 13, 2022, the plaintiff entered into a settlement agreement with Just Energy’s auditor during the class period, Ernst & Young LLP. Information concerning the proposed settlement is set out in the court-approved Notice available for download on this page under Documents. A settlement approval hearing is scheduled for October 31, 2023.