Bragar Eagel & Squire, PC, a nationally recognized shareholder rights law firm, reminds investors that a class action lawsuit has been filed against Li-Cycle Holdings Corp. (“Li-Cycle” or the “Company”) (NYSE: LICY) in the United States District Court for the Eastern District of New York on behalf of all persons and entities who have purchased or otherwise acquired Li -Cycle between February 16, 2021 and March 23, 2022, both dates inclusive (the “Class Period”). Investors have until June 20, 2022 to ask the Court to be named lead plaintiff in the lawsuit.

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On March 24, 2022, Blue Orca Capital released a report (the “Report”) describing the company as “a near-fatal combination of stock promotion, laughable governance, a bankrupt company with a cash haemorrhage, and… ‘very questionable Enron-type accounting’. According to the report, “Li-Cycle recognizes revenue using an Enron mark-to-model accounting gimmick Li-Cycle recognizes revenue months in advance of actual sales of its recycled black mass, based on its own tentative estimate of the future value of the proceeds. This accounting treatment is clearly vulnerable to abuse, giving Li-Cycle discretion over its reported revenues. We suspect that as part of this, Li-Cycle is grossing up the value of its receivables from unsold products and manages earnings through its revenue line.

According to the lawsuit, the defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose: (1) Li-Cycle’s largest customer, Traxys North America LLC, did not is not actually a customer, but merely a broker providing financial capital to the Company while Traxys attempts to sell Li-Cycle’s product to end customers; (2) the Company has engaged in transactions with highly questionable related parties; (3) the Company’s mark-to-model accounting is vulnerable to abuse and gives a false impression of growth; (4) a significant portion of the Company’s reported revenue was derived simply from gross up receivables on products that had not been sold; (5) the gross margins of the Company have probably been negative since its inception; (6) the Company will need an additional $1 billion in funding to support its expected growth (which is more than the Company raised through the merger); and (7) as a result, the defendants’ public statements were materially false and/or misleading at all relevant times. When the real details entered the market, the lawsuit claims investors suffered damages.

On this news, Li-Cycle’s stock price fell $0.47 per share, or 5.60%, to close at $7.93 per share on March 24, 2022.

If you have purchased or otherwise acquired Li-Cycle stock and suffered a loss, are a long-term shareholder, have information, want to know more about such claims, or have questions about this announcement or your rights or interests in regarding these matters, please contact Brandon Walker or Alexandra Raymond by email at [email protected], call (212) 355-4648, or by filling out+this+contact+form. There is no cost or obligation for you.

About Bragar Eagel & Squire, PC:

Bragar Eagel & Squire, PC is a nationally recognized law firm with offices in New York, California and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivatives and other complex litigation before state and federal courts across the country. For more company information, please visit Lawyer advertisement. Prior results do not guarantee similar results.

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