Boohoo is facing a £100m lawsuit from some of its investors after allegations of modern slavery wiped over £1bn from the business’ value.
The fashion retailer is being targeted by City lawyers looking for compensation for the group’s shareholders who suffered steep losses following claims of forced labour in Boohoo’s UK factories, The Telegraph reported.
The allegations were first reported by The Sunday Times in 2020 before verified in an independent review 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”.
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She added: “Boohoo’s monitoring of its Leicester supply chain was inadequate and this was attributable to weak corporate governance.”
No claim has been filed against Boohoo yet, but the class action could reach the High Court if a settlement is not reached.
The fashion retailer is understood to have instructed lawyers at Herbert Smith Freehills to ward off any potential litigation, which could involve some 100 institutional investors.
A spokesman for Boohoo 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.”
The modern slavery revelations saw Boohoo dropped from several retailers’ websites and wiped around £1.1bn off its market value.
This fall in value is the basis for investors’ bid to claim compensation.
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