wellspring capital management lawsuit

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. hXO8WtVH,~W"I/ {;N7'0HAA0%`Ih5L!p! 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. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through six private equity funds. In Wellsprings view, the extent to which releases might have benefitted SportCo (as opposed to benefiting the directors alone) was at least in part a question of fact that could not be resolved on a motion to dismiss. A litigation trust formed through the SportCo bankruptcy then sued, among others, SportCos former directors and its equity sponsor. 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. to hinder, delay, or defraud either present or future creditors." *aUQBT&1#J$8Q)=WE9M'v1s_)GG+.kbN;yELi.UD1N{f'u$y`'GCJfS;4yXwbW${%^tcxG2}+/P@U `a$b6? 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. For purposes of South Carolina law, the parties disagree whether Prospect was a preexisting creditor or a subsequent creditor. 2008) (citing Southmark Corp. v. Crescent Heights VI, Inc. (In re Southmark Corp.), 95 F.3d 53, 53, n.7 (5th Cir. 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. 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 . See Sheehan v. Saoud, 650 Fed. Try our Advanced Search for more refined results. The defendants filed separate motions. Federal Rule of Bankruptcy Procedure 7012(b). Your livelihoodand your sanitydepend . The firm prefers to invest in the business services, industrial, packaging, healthcare services, restaurants . In this process, SportCo initially exchanged a term sheet with certain of its lenders in early November 2018 and allegedly reached an agreement in principle in late December 2018. There are different definitions of insolvency. The defendants asserted common arguments in support of dismissal, but all arguments made in support of dismissal were not asserted by each defendant. Contribute to chinapedia/wikipedia.en development by creating an account on GitHub. Practices: 19.)1. This approach has historically delivered returns well above inflation Our clients Wellspring brought its assets under management to more than $4.4 billion as of January 2018. Accordingly, Wellspring did not find that the defendants in fact breached their duties, but rather held that the plaintiff, a litigation trust, had asserted a viable claim that could proceed to a trier of fact. & Loan Ass'n of New York City, the plaintiff loaned funds to the defendant, secured by a mortgage on a parking garage. Please see our Privacy Policy. The amended complaint asserts three causes of action: (1) avoidance and recovery of fraudulent transfers by Ellett against the Transferee Defendants pursuant to 11 U.S.C. Founded in 1995, Wellspring invests anywhere . Law360 takes your privacy seriously. These are high quality companies, essential to the national, regional, or global economy but whose fundamental qualities are underappreciated and undervalued by the market. The plaintiff/litigation trust also asserted claims directly against Wellspring Capital under an aiding and abetting theoryi.e., asserting that Wellspring Capital itself aided and abetted the SportCo Boards alleged fiduciary duty breaches. Accordingly, Wellspring reinforces the importance of disinterested governance and arms length dealing in connection with the restructuring process. Private equity firm Wellspring Capital Management has acquired Caring Brands International, parent company of home health and hospice franchise company Interim Healthcare, for an undisclosed amount. 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. The plaintiff responds that the statements relate to presently existing facts and that opinions are actionable in a negligence context. James brought a civil suit against Trump in September, alleging the Trump organization had fraudulently inflated the value of . View Videos. PLEASE NOTE: A verification email will be sent to your address before you can access your trial. Fax: 877 376-7003. Over the past 20 years, Wellspring has invested in over 35 platform investments across . 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. Another email stated, in part: "Gotta get your interest? hbbd``b`u@IHEX 3X "2A`V @B'Hl``bdV8 2h 401(k)/403(b) Plan Litigation Risk Management, Analytics & Behavioral Science Consulting (R&G Insights Lab), Committee on Foreign Investment in the United States (CFIUS), E-Discovery, Discovery Strategies & Data Analytics, Executive Compensation & Employee Benefits, Government Enforcement / White Collar Criminal Defense, Life Sciences Licensing, Collaborations & Joint Ventures, The Music Stops on the Texas Two-Step: Third Circuit Dismisses LTL Bankruptcy Case. 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 is not unusual for an entity facing distress to engage with their stakeholders and to negotiate any number of transaction alternatives and terms. The Wellspring court dismissed the litigation trusts claim for breach of the fiduciary duty of care, holding that it was not adequately pled. 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. 20-50554, 2021 WL 4823513 (Bankr. This is despite the fact that 57% of Californians and 37% of California Democrats do not want President Joe Biden to run, according to a poll from the Berkeley Institute of Governmental Studies. The Court now issues this order, granting the motions to dismiss for the reasons set forth below. 91], Andrew Kupchik [Docket No. at 382. 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. 3d 341, 357 (D.S.C. After all, corporate decisionmakers are often tasked with choosing a path where outcomes are at best uncertain. Bill Dawson is taking time off from his $2.2 billion private equity firm Wellspring Capital Management, which will investigate the claims of . The plaintiff's third cause of action, for negligent misrepresentation against defendants Wellspring Capital, Mr. Carles, and Mr. Johnson, must also be dismissed. at 385. This matter is before the Court on motions to dismiss filed by the defendants Wellspring Capital Management, LLC ("Wellspring Capital"), Wellspring Capital Partners IV, L.P. ("Wellspring Capital Partners"), WCM Genpar IV, L.P., WCM Genpar IV GP, LLC (collectively, the "Wellspring Defendants") [Docket No. January 12, 2022 Id. 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 son of sexual assault. Wellspring Capital Management is a leading private equity firm headquartered in New York. The defendants' motions to dismiss are granted. Salaries posted anonymously by Wellspring Capital Management employees. e""8*&B Wellspring, 2021 WL 4823513, at *10. E-mail: sandra@wellspring-cap.com; Videos. 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. 2d 317 (S.D.N.Y. 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. 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. 915 0 obj <> endobj Phone: 650 729-8626. Particularly where negotiations may involve releases, indemnification, or similar provisions, be advised that the ever-present tendency for counterparties to exercise 20/20 hindsight is fully in effect. 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. 1984) for the proposition that under New York law, opinions are actionable in a negligence context. . PLEASE SEE THIS LINK FOR FULL DISCLAIMER: https://www.wellspringcapital.co.uk/disclaimer. Section 544(b) states: The defendants' motions assert numerous arguments in support of the assertion that the Court must dismiss the plaintiff's causes of action. The seller, PE outfit Levine Leichtman Capital Partners, purchased the company in 2015. Most of them do not even contain any concrete information about the proposed AcuSport purchase or the likelihood of the Borrowers' default. Type: Company - Private. It identifies undervalued companies whose share price does not properly reflect the true value of the business. The plaintiff's first and second causes of action are based on 11 U.S.C. Designed By BM Designs. In Sheldon, the defendant, a New York citizen, assigned some personal property to Mr. Dickinson. If you want your business to survive, you need to understand your-self. In 2010, Bain Capital acquired the company for US$1.8 billion. App'x 143 (4th Cir. 1999)). Tenn. 1991); 11 U.S.C. Brought up in a family enjoying long-term success in real estate investment, Avrohom instead turned to the stock market. 541, 546 (Bankr. Asia Pacific; EMEA; Latin America; UK Solicitors; UK Bar; United States Prior results do not guarantee a similar outcome. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. your most valuable capital, your ultimate resource. Click here to login, 2023, Portfolio Media, Inc. | About | Contact Us | Legal Jobs | Advertise with Law360 | Careers at Law360 | Terms | Privacy Policy | Cookie Settings | Help | Site Map, Enter your details below and select your area(s) of interest to stay ahead of the curve and receive Law360's daily newsletters, Email (NOTE: Free email domains not supported). 91], F. Hewitt Grant [Docket No. Please Update this case to get latest docket information. See Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. Alexander Carles' and Bradley Johnson's arguments are limited to the negligent misrepresentation cause of action, the only cause of action asserted against them. The amended complaint is dismissed. Follow along as he lays out the blueprint for his career, and takes us all the way from his first sketch to his thriving personal brand, Spunge. The Loan Agreements and the First and Second Amendments each contain a choice of law provision, providing that New York law applies. There are no allegations in the amended complaint that the debtors' liabilities exceeded their assets at the time of the transfers. San Francisco Bay Area, Silicon Valley), Operating Status of Organization e.g. Our returning and new limited partners share our belief in the unique value proposition that Wellspring brings to the investment process, with our focus on strategic partnership and tailored approach to each investment. Cancellation and Refund Policy, Privacy Policy, and The issue in Merritt Dredging was the sale of a barge and the priority of parties' interests in the proceeds of the sale. And the best part of all, documents in their CrowdSourced Library are FREE. 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. The Court does not have to decide whether Prospect is a preexisting or a subsequent creditor. The plaintiff's first and second causes of action both assert claims for fraudulent conveyances pursuant to 544(b) and S.C. Code 27-23-10. . Financial terms of the transaction were not disclosed. 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. Our tight-knit culture enables transparent oversight and a streamlined decision-making process. Middle Market Private Equity. On May 3, 2018, SportCo agreed to acquire AcuSport's assets in bankruptcy for $7 million. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. 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. 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. The firms objective is to bring partnership, experience and value creation to each investment. Already a subscriber? UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. Broker-Dealers Business & Commercial Litigation Business Restructuring California Consumer Privacy Act Capital Markets Capital Solutions & Private Credit Charitable Foundations China Life Sciences Committee on Foreign Investment in the United States (CFIUS) Consumer Protection and Advertising Law Corporate & Securities Litigation Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. They were not statements of presently existing fact. Their most recent investment was on Jan 1, 2020, when Steele Solutions raised SEC / JURISDICTION. Bloomberg View columnist Barry Ritholtz looks at the people and ideas that shape markets, investing and business. The court considered whether inaccurate credit ratings can form the basis for a negligent misrepresentation claim. Fund VI brings the firm's assets under management to more . Id. 962 0 obj <>stream The plaintiff responds that the express terms of the choice of law provisions provide that the clause applies only to the parties to the Loan Agreements and the Amendments and that the defendants' indirect connection to the parties to the agreements, and the nature of their received benefit, a distribution, are not sufficient to render them third-party beneficiaries of the Loan Agreements and the Amendments. Founded in 1995, Wellspring Capital Management is a private equity firm headquartered in New York, New York. "); Terry v. Walker, 2006 WL 736861, at *5 (W.D. Flipbooks. 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. However, the garage actually had only 402 parking spaces. 1997) (citing Bannister v. Hertz Corp., 316 S.C. 513 (Ct. App. As discussed in Cyrus II, the Fourth Circuit has stated that a bankruptcy court should apply the choice of law rules of the state in which it sits. Twitter Revenue, Earnings Fell About 40% in December, WSJ Says, John Malone andCharter Directors Agree to $87.5 Million Settlement, China E-Commerce Giant JD Set for $1.4 Billion Discount Spree, Between Rounds of Golf, Trumps Searching for the Perfect DeSantis Diss, Your Saturday UK Briefing: Sunak Chalks Up a Win as the Budget Looms, Harrods Shrugs Off Recession Fears as Rich Get Richer, FT Says, Wealthy NYC Family Feuds Over $258 Million Madison Avenue Sale, Tom Sizemore, 'Saving Private Ryan' Actor, Dies at 61, The Exhibit Reality TV Show PittingArtist Against ArtistIs No Masterpiece. 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. 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). This Supreme Court Case Could Redefine Crime, YellowstoneBackers Wanted to Cash OutThen the Streaming Bubble Burst, How Countries Leading on Early Years of Child Care Get It Right, Female Execs Are Exhausted, Frustrated and Heading for the Exits, No Major Offer Expected on Childcare in UK Budget, Biden Gives Medal of Honor to Trailblazing Special Forces Member, Climate Change Is Launching a MutantSeed Space Race, UK Braces for Rare Weather Event That Risks Late-Winter Freeze, This Former Factory Is Now New Taipeis Edgiest Project, What Do You Want to See in a Covid Memorial? The Partners of Wellspring constitute a long-tenured team, having worked together an average of 15 years over three funds. 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 . $46H$DrGHi`0I"DE$"J(aH! Ashmore for Wilson v. Dodds, 262 F. Supp. Wellsprings objective is to bring partnership, experience and value creation to each investment. A second amendment to the Loan Agreements (the "Second Amendment") was executed on September 30, 2014. 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." at 382. at 385. In April 2018, Prospect agreed to defer two quarters of cash interest payments. 2005)). The Debtors in the bankruptcy cases, pending in the District of Delaware, are SportCo Holdings, Inc.; Ellett Brothers, LLC; United Sporting Company, Inc.; Bonitz Brothers, Inc.; Evans Sports, Inc.; Jerry's Sports, Inc.; Outdoor Sports Headquarters, Inc.; Quality Boxes, Inc.; and Simmons Guns Specialties, Inc. D. Del. By teaming up with strong management, Wellspring is able to unlock underlying value and 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. Litigation. 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." In Fall 2018, SportCo Holdings, Inc. (SportCo) was facing severe financial distress. 598, 614 (Bankr. The court considered whether the plaintiff had proved the tort of innocent misrepresentation. Va. June 8, 2011) (acknowledging that Maryland law is not clear regarding whether a fraudulent conveyance action sounds in tort, but concluding that "given that the gravamen of the fraudulent conveyance claim is the wrongfulness of the conveyance and the injury to the creditor, rather than balancing equities or fairness, it is appropriate to conclude that fraudulent conveyance claims sound in tort. Industry: Investment & Asset Management. Relevant here: the plaintiff/litigation trust alleged that SportCos directors: Finally, the litigation trust also asserted a variety of other counts in its complaint related to other facts, circumstances, and actions that are not the subject of this Alert. 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. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . 24. These emails may be a lot of things, but negligent misrepresentations they are not. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Defendant Bernard Ziomek is in default in this matter. The principal and lead portfolio manager at Wellspring Capital is Avrohom Neumann. About Wellspring Capital Management Wellspring Capital Management is a leading private equity firm headquartered in New York. This preference is a result of the Firms differentiated and conservative approach to leverage, in addition to a transparent oversight model, which is driven by our small group of senior professionals and absence of bureaucracy. You have to know whats happening with clients, competitors, practice areas, and industries. at *3 (quoting In re Sharp Int'l Corp., 403 F.3d 43, 53 (2d Cir. However, whether a fraudulent conveyance action is characterized as a tort action is unsettled. 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.

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