Billabong International faces a potential class action from investors hurt by the dramatic decline in the fortunes of the company. An Australian law firm, Slater and Gordon, said it was preparing a lawsuit against the troubled surfwear company on behalf of hundreds of Australian and international investors. The class action would focuse on Billabong's earnings guidance downgrade in December 2011, which caused a sharp decline in its share price. Just four months earlier, in August 2011, the company had forecast that it would achieve strong earnings growth for the 2011/12 financial year. The law firm said in a statement that it would seek compensation on behalf of investors who contend that Billabong engaged in misleading and deceptive conduct and failed to comply with its continuous disclosure obligations. Billabong has been struggling financially over the last few years, making a loss of $276 million in the 2011/12 financial year, a loss of $859 million in 2012/13, and a $126 million loss in the first half of the 2013/14 financial year. In September 2013, Billabong International entered into a recapitalization agreement with Centerbridge Partners and Oaktree Capital Management giving the private equity firms at least 34 percent of the shares.

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