Key points
- NAB has reportedly been served a class action alleging it breached Australian Consumer Law
- The claim follows the 2013 collapse of construction business Walton Group
- The bank allegedly allowed Walton to trade insolvent to recover a $16 million debt, after which subcontractors reportedly wore $80 million of non-payments
Owners of National Australia Bank Ltd (ASX: NAB) shares might want to keep an ear out for news of a class action after reports emerged claiming the bank could be facing a $200 million lawsuit.
The class action reportedly relates to the collapse of Walton Group in 2013. It’s said to include the claim NAB – Walton Group’s financial backer – worked to recover $16 million of funds before the company went under, but left subcontractors in the red.
At the time of writing, the NAB share price is $28.20, down 0.42% on the day.
Let’s take a closer look at the rumoured class action against the big bank.
Is NAB set to face a major class action?
According to reporting by the Australian Financial Review, NAB might have breached Australian Consumer Law by allowing Walton Group to trade insolvent for months before it went belly-up.
Lawyer Robert Armstrong is said to be leading the class action on behalf of 1,400 subcontractors.
The subbies claim the construction company owed them more than $80 million when it collapsed. Losses from the non-payment, including interest and resulting damages, could amount to more than $200 million.
The publication quoted Armstrong as saying:
[Walton] ought to have called in a receiver. Instead, what they did was appoint a restructuring group on the strong recommendation of the NAB. It allowed them 6 months to delay putting in receivership while they secured and recovered their funds. Almost the next day it went into receivership.
It wasn’t long ago Motley Fool Australia reported on another class action again NAB. In June 2021, the bank settled a United States-based class action alleging the bank manipulated the Bank Bill Swap Rate.
NAB share price snapshot
So far, 2022 has not been kind to the NAB share price.
The bank’s stock has slipped 2.22% since the end of 2021. Though it’s still almost 17% higher than it was this time last year.
The post Own NAB (ASX:NAB) shares? Here’s why the bank could be facing a $200m class action appeared first on The Motley Fool Australia.
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More reading
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- Does the NAB (ASX:NAB) share price make it the best value bank right now?
- 2 buy-rated ASX dividend shares with generous yields
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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