Just Energy Group Inc.

Notice of Leave to Proceed and Certification

TORONTO – November 21, 2023 – Law firms Berger Montague (Canada) PC and Siskinds LLP today announce that the Ontario Superior Court of Justice has granted leave to proceed with a statutory secondary market claim under the Ontario Securities Act against Just Energy Group Inc., and certified the action styled as Stephen Gilchrist v. Just Energy Group Inc., bearing Court File No. CV-19-627174-00CP as a class proceeding under the Ontario Class Proceedings Act, 1992 on consent.

The action has been certified on behalf of a class comprising all persons and entities, wherever they may reside or may be domiciled, who acquired any Just Energy common shares (previously listed, TSX/NYSE: “JE”) or preferred shares (previously listed, TSX: “JE.PR.U”; and NYSE: “JE.PR.A”) between May 16, 2018 and August 14, 2019, and retained some or all of those shares at the close of trading on July 22, 2019 or August 14, 2019, other than certain defined “excluded persons”.

Berger Montague (Canada) PC and Siskinds LLP are Canadian counsel for the Plaintiffs and class members. They are working with The Rosen Law Firm, P.A. on the action.

For more information about the action, and to review the Court’s leave and certification order, and a detailed notice of leave and certification, please see the links to the right of this page.

On April 15, 2024, the Defendants served their Statement of Defence. The Plaintiff served his Reply on June 14, 2024 and the action is proceeding to discovery.

Questions for the Class Member’s lawyers may be directed to:

Berger Montague (Canada) PC
330 Bay Street, Suite 1302
Toronto, ON  M5H 2S8
Tel: 647.598.8772 ext 2
Email: [email protected]

Case History

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.