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Description. You can review interesting Flipbooks on my site. All business will get complaints. 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. Will His AI Plans Be Any Different? Public Records Policy. Cases involving other matters not classified elsewhere, 890, 1890, 1990, 2890, 2899, 2999, 3375, 3890, 3896, 3899, 3999, 4890, 4896, 4999, Wellspring Capital Management, LLC; Wellspring Cap v. Barry, III et al. 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. 930 0 obj <>/Filter/FlateDecode/ID[<6781EE974E7B2C4D9274E8F359D28E60>]/Index[915 48]/Info 914 0 R/Length 80/Prev 600062/Root 916 0 R/Size 963/Type/XRef/W[1 2 1]>>stream The company will explode Rich!" CDI's smaller Atlanta peer said to weigh sale in '18. 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 . REGISTRATION STATUS . Angel, Fund of Funds, Venture Capital), This describes the stage of investments made by this organization (e.g. In considering what choice of law provisions to apply, the Fourth Circuit stated: The Court notes that there is a specific fraudulent conveyance section of the Bankruptcy Code. Since its founding in 1995, Wellspring has raised over $4.5 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. New York law prohibits both actual and constructive fraudulent conveyances. Wellspring Capital Management is a leading private equity firm headquartered in New York. The amended complaint is dismissed. In June 2017, Gymboree announced it was filing for Chapter 11 bankruptcy protection. For example, the October 27, 2017 email stated, "The only way to optimize is to merge with Acusport." From October 2017 to April 2018, Mr. Carles and Mr. Johnson sent numerous emails to representatives of Prospect, attempting to induce Prospect to agree to forego exercising its rights in the event of a default. Wellspring Capital and the D&O Defendants grossly and recklessly mismanaged the business and carried out their respective roles in a manner that was devoid of reasonable inquiry and diligence in dereliction of their fiduciary duties to Prospect as a creditor of the increasingly insolvent enterprise. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . These emails can hardly be considered negligent misrepresentations. at 358. The court stated: See Credit Alliance Corp. v. Arthur Anderson & Co., 65 N.Y.2d 536 (NY App. Wellspring brought its assets under management to more than $4.4 billion as of January 2018. Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. Over the past 20 years, Wellspring has invested in over 35 platform investments across . Id. Mr. Friedman filed an amended complaint the same day. .JFY+h!Hkw;s"$ 4AuF~!D =j]4z*g7i>B 1NEDm @@,!ptz"Br}-rh>wI }9.&>5/n2n/OefX For purposes of South Carolina law, the parties disagree whether Prospect was a preexisting creditor or a subsequent creditor. 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. SaaS, Android, Cloud Computing, Medical Device), Where the organization is headquartered (e.g. 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. 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. Haynsworth Sinkler Boyd, P.A. Most of them do not even contain any concrete information about the proposed AcuSport purchase or the likelihood of the Borrowers' default. . at 321. Id. Innovative Custom Brands, Inc. v. Minor, 2016 WL 308805, at *2 (S.D.N.Y. Finally, although the plaintiff asserts that federal conflict of law principles should apply, he argues that even under South Carolina conflict of law rules, South Carolina law should apply. 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. R. Civ. Accordingly, Wellspring reinforces the importance of disinterested governance and arms length dealing in connection with the restructuring process. Similarly, Merritt Dredging suggests that federal law would apply to a section 548 cause of action, but that state law should apply to fraudulent conveyance claims based on state law. 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. 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. & Loan Ass'n v. Hirschfeld, 476 N.Y.S.2d 292 (N.Y. App. 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. 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." to hinder, delay, or defraud either present or future creditors." New York law requires insolvency at the time of the transfer, and South Carolina law requires insolvency both at the time of the transfer, and at the time the creditor seeks to collect the debt. However, whether a fraudulent conveyance action is characterized as a tort action is unsettled. On May 3, 2018, SportCo agreed to acquire AcuSport's assets in bankruptcy for $7 million. 962 0 obj <>stream The Court addresses in this order only those arguments that clearly mandate dismissal. This approach has historically delivered returns well above inflation Our clients 1994)). Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Attorney advertising. All rights reserved. Read More Key Principal: William Dawson Junior See more contacts Industry: Management investment, open-end Printer Friendly View Address: 605 3RD Ave FL 44 New York, NY, 10158-0011 United States See other locations Phone: Website: www.wellspringcapital.com Employees (this site): Actual Copyright 2023 Ropes & Gray LLP. The defendants asserted common arguments in support of dismissal, but all arguments made in support of dismissal were not asserted by each defendant. at 613-14. Business Restructuring, As with the plaintiffs assertions around disinterested governance, such allegations may (or may not) bear any semblance to the actual facts. The plaintiff, however, asserts that federal conflict of law principles should govern what state's law applies in this case, because "[a] claim under 544(b) incorporates 'applicable law,' but it is a claim under federal law with a substantive federal law recovery scheme." In Cyrus II, the court also acknowledged that the Fourth Circuit has found otherwise and determined that state choice of law rules should be used in bankruptcy cases. Marlow v. Oakland Gin Co. (In re The Julien Co.), 128 B.R. hb```e``jb`a`\ @1V h`2q:lp10qfaqB,X3s10iH(^t1 Founded in 1995, Wellspring Capital Management is a private equity firm headquartered in New York, New York. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Lister v. NationsBank of Delaware, N.A., 329 S.C. 133, 143 (Ct. App. The Uniform Commercial Code defines insolvency as the inability to pay debts in the ordinary course or when they come due, while the Bankruptcy Code defines insolvency as debts exceeding assets. By teaming up with strong management, Wellspring seeks to unlock underlying value and pursue new growth opportunities through strategic initiatives, operating improvements and add-on acquisitions. Our tight-knit culture enables transparent oversight and a streamlined decision-making process. Type: Company - Private. Therefore, a finding that Prospect is a subsequent creditor would require dismissal of the first and second causes of action. In support of this argument, the plaintiff cites a case from the United States District court for the District of Idaho, which was affirmed by the Ninth Circuit, as well as a case from the United States Bankruptcy Court for the Southern District of Texas, in which the court stated that 544(b) claims are unique "because they exist only to the extent of applicable state law," but then found, "Even so, such claims are not pendant state claims in federal bankruptcy cases, but are federal causes of action rooted in federal bankruptcy law and policy." Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Id. The firm prefers to invest in the business services, industrial, packaging, healthcare services, restaurants . Find More Contacts for Wellspring Capital Management, Edit Lists Featuring This Company Section, European Regulation Ushers In Global Future For Fundraising, Wellspring Capital Management Acquires Caring Brands International, Private Equity Firms with Investments in United States, Greater New York Area Investors with Funds Raised in 2017, Private Equity Firms with Investments in Asia. The amended complaint fails to allege insolvency at the time of the transfer, an essential element of a fraudulent conveyance claim under either New York or South Carolina law, and therefore fails to state a claim under 544(b). Middle Market Private Equity. Ellett used $54,860,549.74 of the First Amendment loan proceeds to fund distributions to the Transferee Defendants. Ashmore for Wilson v. Dodds, 262 F. Supp. January 12, 2022 Fund VI brings the firm's assets under management to more than $4.4 billion. The District Court stated that "[w]hether a fraudulent conveyance claim should be characterized as a tort action is uncertain and disputed among American jurisdictions." . 1996)). 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. These facts, as recited in the complaint, are taken as true for purposes of the motions to dismiss. Angel, Fund of Funds, Venture Capital), General contact email for the organization. The firm's objective is to . 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. In Fall 2018, SportCo Holdings, Inc. (SportCo) was facing severe financial distress. There are also no allegations concerning expenses. 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 . 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." Adversary Proceeding No. A New York buyout baron has taken a leave of absence from his fund after an explosive lawsuit claimed last week that he threatened an ex-employee to keep quiet after she accused his son of raping her. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. A free inside look at Wellspring Capital Management salary trends based on 22 salaries wages for 17 jobs at Wellspring Capital Management. Oil Producers Hand $128 Billionto Investors as Doubts Grow About Future of Fossil Fuels, Your Saturday Briefing: Trumps Comeback Plan, Wall Street Whistles Away, British Parents Turn to Home Equity to Help Young Buy Property, Japanese Unions Seek Biggest Pay Rise in 25 Years for Workers, Sorry, Fed, Most US Mortgage Rates Were Locked In During Pandemic Lows, Italys CDP Is Nearing Offer for Telecom Italia Network. P. 12(b)(6) provides for dismissal of an action if the complaint "fail[s] to state a claim upon which relief can be granted." at 382. at 385. REGISTRATION STATUS. In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. These emails may be a lot of things, but negligent misrepresentations they are not. The court addressed the dissent's finding, that the defendant's determination of the number of parking spaces was a matter of judgment or opinion and was therefore unactionable. 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. 3d 473, 506 (S.D.N.Y. [Amended Complaint, 57]. 91], Andrew Kupchik [Docket No. Importantly, however, the Wellspring court declined to dismiss the litigation trusts duty of loyalty claim, stating on a cursory basis that Drawing all inferences in favor of the Trustee, the Complaint contains sufficient allegations that the D&O Defendants breached their duty of loyalty regarding the Failed Out of Court Restructuring. Id. However, the garage actually had only 402 parking spaces. Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American. Sav. James brought a civil suit against Trump in September, alleging the Trump organization had fraudulently inflated the value of . Bill Dawson is taking time off from his $2.2 billion private equity firm Wellspring Capital Management, which will investigate the claims of . Wellsprings facts, as alleged, are fairly straightforward. William F. Dawson, Jr., Chief Executive Officer of Wellspring, said, "My partners and I are pleased to complete the successful raising of Wellspring's sixth fund, which is a direct result of the strong relationships we have built with the investment community over many years and the returns we have generated. 3d 341, 357 (D.S.C. Finally, one place to get all the court documents we need. We are taking this matter very seriously, and have launched an immediate internal investigation, Jeffrey Gould, Wellsprings head of marketing and investor relations, told investors last week in a note seen by Bloomberg News. Law360 may contact you in your professional capacity with information about our other products, services and events that we believe may be of interest.Youll be able to update your communication preferences via the unsubscribe link provided within our communications.We take your privacy seriously. By teaming up with strong management, Wellspring is able to unlock underlying value and In fact, the amended complaint states that the distributions at issue here were made in October 2012 and March 2013. Please see our Privacy Policy. Certain state securities regulatory authorities have similar exemptions based on . Id. They were not statements of presently existing fact. Limited partners include leading pension funds, endowments, fund of funds and family offices from the U.S., Europe and Asia. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. By teaming up with strong management, Wellspring is able to unlock underlying value and. These are high quality companies, essential to the national, regional, or global economy but whose fundamental qualities are underappreciated and undervalued by the market. Bloomberg View columnist Barry Ritholtz looks at the people and ideas that shape markets, investing and business. Further, if the statement is solely a speculative prediction about some potential business venture or course of action being contemplated, it is not actionable. King County, 863 F. Supp.2d at 318. Id. Finally, in West Side Fed. 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 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." Please Update this case to get latest docket information. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. 20-50554, 2021 WL 4823513 (Bankr. 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. [Amended Complaint, 37, 40]. 89], Charles E. Walker, Jr. [Docket No. 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.