Listed freight and logistics business Fliway Group, has reversed a $250,000 provision after settling a claim with a former customer, thanks to a deed of indemnity with shareholders who took the company public.
Fliway cited the claim from a former customer in its March prospectus. The client claims Fliway overcharged for warehouse storage services between July 2008 and August 2012, and it claimed $778,872 plus $206,943 interest, or about $986,000 in total, according to BusinessDesk.
BusinessDesk reports the terms of the settlement were confidential, but the costs associated with the claim and settlement exceeded the $250,000 threshold for Fliway’s deed of indemnity with its selling shareholders.
The shareholders entered into a deed of indemnity in favour of Fliway on March 5.
The indemnity protected Fliway against any loss of earnings as a result of the claim. However, Fliway could not make a claim for the indemnity unless the amount exceeded $250,000.
Fliway’s chief financial officer Jim Sybertsma says that the claim had settled.
“If the claim had come to $245,000, Fliway would have had to pay the whole thing,” says Sybertsma.
Fliway had made a $250,000 provision at the end of the financial year 2015 to allow for a potential claim. That provision will now reverse.
