wellspring capital management lawsuit

There are different definitions of insolvency. Cancellation and Refund Policy, Privacy Policy, and There are no allegations in the amended complaint that the debtors' liabilities exceeded their assets at the time of the transfers. Additionally, the plaintiff argues that the third element of New York's third-party beneficiary test is not met because there is no express intent in the Loan Agreements or the Amendments to compensate the defendants in the event the distributions were not paid and in fact, the Loan Agreement indicates the opposite by virtue of the inurement clause found in Section 13.1. The Court addresses in this order only those arguments that clearly mandate dismissal. UniCourt uses cookies to improve your online experience, for more information please see our Privacy Policy. Try our Advanced Search for more refined results. 23, 2006) (stating that some courts characterize fraudulent conveyance actions as tort actions, while others characterize them as matters in equity). Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. %PDF-1.5 % Sav. Instead, they may form the basis for a negligent misrepresentation claim if the party making the misrepresentation possesses some special expertise (by way of his job title or position, for example), or has some special knowledge about the particular fact that is allegedly misrepresented. After the defendants filed replies, the Court held a hearing on June 18, 2020. F. Hewitt Grant asserted the lack of a triggering creditor due to Prospect Capital Corporation's knowing participation in the transfers and failure to state a claim under New York law due to lack of insolvency and under South Carolina law due to failure to plead actual fraud. David Westin speaks with top names in finance about the week's biggest issues on Wall Street. View Videos. We see how Bembury is able to walk the line of business convention while taking his art to new heights, turning ordinary items into extraordinary footwear. We have interesting videos for you to watch on my site. The elements of a negligent misrepresentation claim under South Carolina law are as follows: Turning now to the present case, the third cause of action must be dismissed under either New York or South Carolina law because the statements that the plaintiff asserts constituted negligent misrepresentations were all statements regarding potential outcomes of a potential business endeavor; thus, they relate to future events and cannot form the basis of a negligent misrepresentation claim. 20-50554, 2021 WL 4823513 (Bankr. Wellspring has the flexibility to complete transactions ranging from $100 million to as much as $1.5 billion in total value in a wide range of industries. King County, 863 F. Supp.2d at 318. As we here at Ropes & Gray look back on 2021 and ahead into 2022, we call your attention to the lessons of Friedman v. Wellspring Capital Mgmt., LLC (In re SportCo Holdings, Inc.), Case No. Wellspring brought its assets under management to more than $4.4 billion as of January 2018. The defendants argue that in the event the Court finds the choice of law provision does not apply, South Carolina choice of law principles should be consulted to reach a finding that New York law applies. Bill Dawson is taking time off from his $2.2 billion private equity firm Wellspring Capital Management, which will investigate the claims of . Wellspring Capital formed SportCo Holdings, Inc. ("SportCo") to serve as a holding company for United Sporting Company, Inc. ("United Sporting"), Ellett's direct parent; Ellett; and its subsidiaries. The amended complaint contains no allegations that either Ellett, with respect to the first cause of action, or SportCo, with respect to the second cause of action, was insolvent at the time of the distributions or became, at the time of the transfers, insolvent as a result of the transfers. Id. Type: Company - Private. The Wellspring court dismissed the litigation trusts claim for breach of the fiduciary duty of care, holding that it was not adequately pled. It identifies undervalued companies whose share price does not properly reflect the true value of the business. The South Carolina Supreme Court stated that New York law would govern the validity of the transfer before it, unless applying New York law would result in a violation of South Carolina public policy. [Amended Complaint, 54]. The United States Court of Appeals for the Third Circuit wasted no time getting the new year off to a roaring start through its ruling in In re LTL Mgmt., LLC, Case No. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. An action with multiple causes of action was commenced by Prospect Capital Corporation in South Carolina state court and was removed to this court on September 6, 2019. In an email obtained by . 544(b). Therefore, a finding that Prospect is a subsequent creditor would require dismissal of the first and second causes of action. Id. Please see our Privacy Policy. The plaintiff's first and second causes of action are based on 11 U.S.C. Tenn. 1991); 11 U.S.C. Munich, by far the largest city in southern Germany, lies about 30 miles (50 km) north of the edge of the Alps and along the Isar River, which flows through the middle . In June 2017, Gymboree announced it was filing for Chapter 11 bankruptcy protection. Time to Read: 6 minutes James brought a civil suit against Trump in September, alleging the Trump organization had fraudulently inflated the value of . 3d 473, 506 (S.D.N.Y. York Capital Management Feb 2021 - Present2 years 1 month New York, New York, United States Wellspring Capital Management LLC 13 years 5 months Partner Dec 2016 - Dec 20204 years 1 month. California Weighs $360,000 in Reparations to Eligible Black Residents. In 2008, Wellspring Capital, through its fund Wellspring Capital Partners, acquired Ellett. It is notable that the first and second causes of action are based only on South Carolina law; however, because the parties disagree as to whether South Carolina or New York law should apply, the Court will analyze the first and second causes of action under both. Otherwise you cannot get paid." On 05/20/2022 Wellspring Capital Management, LLC Wellspring Cap filed an Other lawsuit against Barry, III.This case was filed in U.S. Bankruptcy Courts, New York Southern Bankruptcy. Please Update this case to get latest docket information. Despite that agreement in principle, it was alleged in relevant part that: Unable to agree on the release and indemnification issue, SportCos out-of-court restructuring failed, and SportCo defaulted on its funded debt shortly thereafter. Sec'y of State for Def. The firm functions as a strategic rather than tactical partner, providing management teams with top-line support, M&A experience and financial expertise, and access to resources. Bloomberg View columnist Barry Ritholtz looks at the people and ideas that shape markets, investing and business. The plaintiff responds that Prospect is a preexisting creditor because the distributions were not made until after Prospect became a creditor when the Loan Agreements and the Amendments were signed. The Wellspring Defendants asserted all of these arguments and also asserted failure to state a claim under section 550 against certain defendants. New York law regarding third party beneficiaries provides: With respect to South Carolina's choice of law analysis, South Carolina conflict of law principles provide that "the substantive law governing a tort action is determined by the state in which the injury occurred." 0 541, 546 (Bankr. Salaries posted anonymously by Wellspring Capital Management employees. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. Wellspring also rejected in cursory fashion the defendants argument that it is not necessarily a breach . The United States District Court for the District of South Carolina found in a fraudulent conveyance case, relying on Terry v. Walker, that South Carolina conflict of law rules should apply to determine the applicable substantive law. The court stated that expressions of opinion are actionable under New York law, but further stated: New York courts have also stated that statements of "mere puffery", or "statements founded entirely on speculation concerning future profits from proposed business endeavors" are not actionable. This is the best way to manage and repair your business reputation. Investment Philosophy; Target Investments; Portfolio Ellett Brothers LLC ("Ellett"), a South Carolina limited liability company, was a sporting goods distributor. Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $3 billion of private equity capital. SportCo later filed a free fall bankruptcy and liquidatedallegedly causing substantial losses for unsecured creditors that would not have occurred had SportCo accepted that agreement in principle allegedly reached in December 2018. 1988) (adopting rule from Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487 (1941) stating that a federal court sitting in diversity should apply the choice of law rules of the state in which it sits). Adversary Proceeding No. In King County, the court considered suits by investors seeking to recover losses incurred after the collapse of a structured investment vehicle. After all, corporate decisionmakers are often tasked with choosing a path where outcomes are at best uncertain. We work with successful motivated individuals to help them achieve their investment and wealth management objectives. Andrew Kupchik argued dismissal was necessary due to Prospect's ratification and/or consent to the distributions, due to failure to state a claim under New York law because of lack of insolvency and failure to state a claim under South Carolina law due to failure to plead actual fraud, due to the expiration of the statute of limitations on the fraudulent conveyance claims, and due to failure to plead the existence of a triggering unsecured creditor. It had previously received notification, in early 2018, that the Borrowers would default on their obligation under the Loan Agreements and the Amendments in the second quarter of 2018. Bill Dawson is taking time off from his $2.2 billion private equity firm Wellspring Capital Management, which will investigate the claims of Dawson's threats, according to an internal memo. The plaintiff does not dispute that the amended complaint does not plead actual fraud, and it clearly does not. July 5, 2017). Fax: 877 376-7003. Password (at least 8 characters required). These emails can hardly be considered negligent misrepresentations. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Accordingly, SportCo began negotiations with certain of its lenders around a potential restructuring transaction. In early 2018, Wellspring Capital notified SportCo's secured lenders that SportCo would default on a $4.7 million interest payment due in the second quarter of 2018. Public Records Policy. Defendant Bernard Ziomek is in default in this matter. . Wellspring Capital Management Group LLC ("Wellspring"), a New York-based private equity firm, announced that on May 29, 2020, it closed the acquisition of Steele Solutions, Inc. ("SSI" or the "Company"), a value-add supplier into the industrial automation sector. The elements of a negligent misrepresentation claim under New York law are: The plaintiff also cites King County, Washington v. IKB Deutsche Industriebank, 863 F. Supp. Id. You can help Wikipedia by expanding it. Ronald J. Friedman, as the trustee for the SportCo Creditors' Liquidation Trust, Plaintiff, v. Wellspring Capital Management, LLC, Wellspring Capital Partners IV, L.P., WCM Genpar IV, L.P., WCM Genpar IV GP, LLC, Alexander E. Carles, Bradley Johnson, F. Hewitt Grant, Charles E. Walker, Jr., Todd Boehly, Bernard Ziomek, and Andrew Kupchik, Defendants. 915 0 obj <> endobj It identifies undervalued companies whose share price does not properly reflect the true value of the business. When it comes to helping companies that show promise, Wellspring Capital Management is overflowing with support. The Court does not have to decide whether Prospect is a preexisting or a subsequent creditor. Wellspring partners with highly qualified and motivated senior management teams, actively working together to unlock a companys potential by providing ongoing financial, strategic and operational support. Wellspring, founded in 1995, has raised more than $4 billion of capital commitments through six private equity funds, according to its website. Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $3 billion of private equity capital. Sounds like a tidy deal at year end [2017] made a lot of sense." Id. Its success is based on a portfolio that, since inception in 2014, has delivered double digit returns on an annualised basis. Private equity firm Wellspring Capital Management LLC on Friday hit a slew of its insurers with a suit in New York state court alleging they must defend it against claims that it plundered . January 12, 2022 The choice of law provision in the Loan Agreements states: In October 2017, Wellspring Capital was contemplating a purchase of AcuSport, a competitor, by Ellett, for $14.8 million. Wellspring Capital is a boutique discretionary management service with a portfolio positioned for high performance. 1996)). All business will get complaints. By Zachary Zagger (July 31, 2020, 9:56 PM EDT) -- Private equity firm Wellspring Capital Management LLC on Friday hit a slew of its insurers with a suit in New York state court alleging they must defend it against claims that it plundered millions of dollars from gun seller United Sporting Cos. Inc., which blamed its bankruptcy on Donald Trump's win in the 2016 election. Access to case data within articles (numbers, filings, courts, nature of suit, and more. In considering whether to grant a motion to dismiss under Rule 12(b)(6), the court may take judicial notice of matters of public record and may consider documents attached to the complaint and the motion to dismiss, "so long as they are integral to the complaint and authentic." The parties are in agreement that New York and South Carolina law regarding negligent misrepresentations are substantially similar and that as a result, the Court is not required to engage in a choice of law analysis as to the third cause of action. *aUQBT&1#J$8Q)=WE9M'v1s_)GG+.kbN;yELi.UD1N{f'u$y`'GCJfS;4yXwbW${%^tcxG2}+/P@U `a$b6? 2021 by wellspring capital Management. Oct. 14, 2021) (Stickles, J.) Wellspring has earned the reputation as a trusted, reliable partner and is often the preferred partner of a portfolio companys senior management team. In Sheldon, the defendant, a New York citizen, assigned some personal property to Mr. Dickinson. Wellspring Capital Management Fund Manager Website www.wellspringcapital.com Fund Category Private Equity Close Date 0000-00-00 Fund Family Wellspring Capital Partners Native Currency USD Fund Manager's Location 605 Third Avenue 44th Floor New York, NY 10158 United States +1 (212) 000-0000 Fund Domiciles Canada REGISTRATION STATUS. For the reasons set forth below, under the law of either state, the plaintiff's first and second causes of action must be dismissed. Crazy 8 was started in August 2007. Defendant Wellspring Capital Management LLC is a Delaware limited liability company with its principal place of business at 390 Park Avenue, New York, New York 10022. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. The defendants' remaining arguments need not be addressed. Wellspring targets investments with the following characteristics: Designed By, https://www.wellspringcapital.co.uk/disclaimer. My company, Asia Marketing and Management, has global ambitions but consists largely of me and the intelligence, experience, contacts, and per-sonality I bring to my clients . An outside law firm will assist with the probe to determine the validity of these reports, which allege behavior that is not only shocking but completely inconsistent with our corporate values and standards., Family calls complaint pure fiction intended as a shakedown, Dawson steps away from firm to spend time with his family. The first and second causes of action are dismissed. The complaint must provide more than mere "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Casetext, Inc. and Casetext are not a law firm and do not provide legal advice. To this end, Wellspring reinforces two key principles in particular: We encourage you to contact your Ropes & Gray team to discuss these matters more fully. 92], Todd Boehly [Docket No. Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. Wellspring Capital Management is a mega-sized private equity firm that focused on a variety of transaction situations. The courts analysis of the duty of loyalty claim can be fairly characterized as limited, consisting of four short paragraphs that largely restate or simply quote the complaint. From reading the Financial Times at school to managing his first portfolio at just 18, he has built Wellspring Capital into a nationwide wealth management boutique. The amended complaint also details numerous emails sent by Mr. Carles and Mr. Johnson to a representative of Prospect, urging Prospect to defer its right to payment in the event of a default. Industry: Investment & Asset Management. The firm functions as a strategic rather than tactical partner, providing management teams with top-line support, M&A experience and financial expertise, and access to resources. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. Wellspring Capital Management LLC Chief Executive Officer Bill Dawson has taken a leave of absence, days after a former employee alleged in a lawsuit that he threatened her for accusing his. The firm's objective is to bring partnership, experience and value creation to each investment. The amended complaint further states, "As recently as 2015, Ellett was the fifth largest private company in South Carolina and the largest distributor of firearms in the United States, with annual revenues of $750 million, over 350 employees nationwide, and 175 employees in South Carolina." Wellspring Capital Management is a leading private equity firm headquartered in New York. Their most recent acquisition was Caring Brands International on Oct 25, 2021. The firm prefers to invest in the business services, industrial, packaging, healthcare services, restaurants . Consumers want to see how a business took care of business. 89], Charles E. Walker, Jr. [Docket No. However, whether a fraudulent conveyance action is characterized as a tort action is unsettled. 19-80071-DD (Bankr. Angel, Fund of Funds, Venture Capital), This describes the stage of investments made by this organization (e.g. In Fall 2018, SportCo Holdings, Inc. (SportCo) was facing severe financial distress. 1999)). In 2012, the year that the amended complaint alleges Ellett "achieved record sales and earned revenues of approximately $1.2 billion," Ellett and its operating subsidiaries (the "Borrowers") entered into a Third Amended and Restated Loan and Security Agreement and a Second Lien Loan and Security Agreement (collectively, the "Loan Agreements") with lenders including Prospect Capital Corporation ("Prospect"), pursuant to which Prospect and the other lenders loaned $280 million to the Borrowers. Munich, German Mnchen, city, capital of Bavaria Land (state), southern Germany. A constructive fraudulent conveyance exists under New York law if the conveyance was made without fair consideration and "(1) the transferor is insolvent or will be rendered insolvent by the transfer in question; (2) the transferor is engaged in or is about to engage in a business transaction for which its remaining property constitutes unreasonably small capital; or (3) the transferor believes that it will incur debt beyond its ability to pay." Founded in 1995, Wellspring Capital Management is a private equity firm headquartered in New York, New York. Business Restructuring, Ellett used $54,860,549.74 of the First Amendment loan proceeds to fund distributions to the Transferee Defendants. 1985). The Court also notes that, setting the other factors aside, given the extreme nature of the urgent tone of these emails, and the highly sophisticated status of Prospect, Prospect satisfying the justifiable reliance element of a negligent misrepresentation claim is questionable, at best. [Amended Complaint, 37, 40]. Discretionary portfolio management with a difference, Make your investment with Wellspring Capital Management. The Loan Agreements and the First and Second Amendments each contain a choice of law provision, providing that New York law applies. Middle Market Private Equity. 598, 614 (Bankr. Todd Boehly filed a joinder to the Wellspring Defendants' motion to dismiss. About Wellspring Capital Management Wellspring Capital Management is a leading private equity firm headquartered in New York. These emails may be a lot of things, but negligent misrepresentations they are not. Already a subscriber? CDI's smaller Atlanta peer said to weigh sale in '18. Id. 6. Shoe designer and creative Salehe Bembury takes us on a journey from his childhood growing up in Manhattan, to an invaluable degree in industrial design, to working with some of the biggest names in fashionbefore breaking off to make his own name. Wellspring Capital is a boutique discretionary management service - with a portfolio positioned for high performance. Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. 1994)). Marlow v. Oakland Gin Co. (In re The Julien Co.), 128 B.R. See Silvercreek Mgmt., Inc. v. Citigroup, Inc., 346 F. Supp. [Amended Complaint, 93]. Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. Under either New York or South Carolina law, the plaintiff's third cause of action for negligent misrepresentation fails to state a claim for which relief can be granted. As part of the debt management process, it said it would close 375 of its 1,300 stores. 22-2003, 2023 WL 1098189 (3d Cir. The court must construe the allegations in the complaint in the light most favorable to the plaintiff. In connection with this contemplated purchase, Alexander Carles, a managing partner of Wellspring Capital and an officer and director of SportCo and its subsidiaries, and Bradley Johnson, the president and chief executive officer of SportCo and its subsidiaries, sought to convince Prospect to forbear from exercising any remedies in the event of a payment default. Id. 2010); Saifullah v. Johnson, 948 F.2d 1282, at *1 (4th Cir. The December 26, 2017 email stated, "So you will waive [your interest payments]. Active, Closed, This describes the type of investor this organization is (e.g. EFFECTIVE DATE; SEC: Terminated: 3/2/2007: By teaming up with strong management, Wellspring is able to unlock underlying value and But Wellspring would arguably undermine the ability to negotiate for what are customary and, indeed, necessary protections for corporate decisionmakers in those same transactions, such as releases, indemnity, or exculpation. (Wellspring). Prior results do not guarantee a similar outcome. Nor is it necessary for the Court to decide whether New York or South Carolina law applies under South Carolina's choice of law principles. endstream endobj startxref Wellsprings investment professionals possess diverse and complementary backgrounds that combine valuable experience in private equity, restructuring, corporate finance, capital markets and corporate law. Wellspring Capital Management has acquired 38 organizations. Wellspring Capital formed SportCo Holdings, Inc. ("SportCo") to serve as a holding company for United Sporting Company, Inc. ("United Sporting"), Ellett's direct parent; Ellett; and its subsidiaries. & Loan Ass'n v. Hirschfeld, 476 N.Y.S.2d 292 (N.Y. App. 609, 614 (Bankr. In particular, the bankruptcy court held that the allegations failed to support a conclusion that the SportCo directors were somehow acting on an uninformed basis or that the rejection of the out-of-court restructuring was grossly negligent. These tools have been used since the firm's inception in 1995 to generate consistent business improvement in its portfolios. The Court now issues this order, granting the motions to dismiss for the reasons set forth below. The court considered whether the plaintiff had proved the tort of innocent misrepresentation. Id. 8h`6$67Xn@,`& Wellspring Capital Management, LLC; Wellspring Cap. Haynsworth Sinkler Boyd, P.A.

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