to hinder, delay, or defraud either present or future creditors." The defendants asserted common arguments in support of dismissal, but all arguments made in support of dismissal were not asserted by each defendant. The Court addresses in this order only those arguments that clearly mandate dismissal. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. 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 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. In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. This article about a private equity or venture capital firm based in the United States is a stub. In June 2017, Gymboree announced it was filing for Chapter 11 bankruptcy protection. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Under certain conditions, section 548 allows the avoidance of a transfer made within two years of the date of the filing of the bankruptcy petition. The defendants argue that Prospect is a subsequent creditor, because it had knowledge of and approved of the distributions prior to them being completed. By teaming up with strong management, Wellspring is able to unlock underlying value and pursue new growth opportunities through strategic initiatives, operating improvements and add-on acquisitions. Even among California Democrats, Newsom is still in the negatives, with 54% wanting him to sit out in 2024 and only 35% wanting him to run. (Wellspring). Middle Market Private Equity. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. REGISTRATION STATUS. 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 . There are also no allegations concerning expenses. Wellspring Capital Management is a leading private equity firm headquartered in New York. Bill Dawson is taking time off from his $2.2 billion private equity firm Wellspring Capital Management, which will investigate the claims of . 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. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through . Time to Read: 6 minutes Wellspring Capital Management is a leading private equity firm headquartered in New York. [Amended Complaint, 54]. The December 26, 2017 email stated, "So you will waive [your interest payments]. Password (at least 8 characters required). See Silvercreek Mgmt., Inc. v. Citigroup, Inc., 346 F. Supp. 112]. The plaintiff relies on the fact that Ellett was unable to pay the debt owed to Prospect at the time that it had to be paid in full; however, this is not the only relevant point in time. Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American. 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 June 2019, SportCo and its subsidiaries (the "Debtors") filed chapter 11 bankruptcy cases in the United States Bankruptcy Court for the District of Delaware. Wellspring Capital Management prevailed in the sponsor-driven process for Center for Diagnostic Imaging, the country's largest private . 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 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 Founded in 1995, Wellspring invests anywhere . Wellspring Capital manages an investment portfolio of between 10 and 15 international stocks. The basic complaint is that Wellspring directors put self-interests above those of the company and its creditors. 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? Wellspring Capital Management, LLC; Wellspring Cap. Wellspring, founded in 1995, has raised more than $4 billion of capital commitments through six private equity funds, according to its website. 3d 341, 357 (D.S.C. The principal and lead portfolio manager at Wellspring Capital is Avrohom Neumann. 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). 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 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. CDI's smaller Atlanta peer said to weigh sale in '18. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . See Scheidelman v. Henderson (In re Henderson), 423 B.R. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). For example, the October 27, 2017 email stated, "The only way to optimize is to merge with Acusport." The seller, PE outfit Levine Leichtman Capital Partners, purchased the company in 2015. The court stated: See Credit Alliance Corp. v. Arthur Anderson & Co., 65 N.Y.2d 536 (NY App. (Compl. Angel, Fund of Funds, Venture Capital), General contact email for the organization. at *3 (quoting In re Sharp Int'l Corp., 403 F.3d 43, 53 (2d Cir. The defendants argue that as a subsequent creditor, Prospect is required to plead actual fraud, and the amended complaint fails to do so. In the legal profession, information is the key to success. SaaS, Android, Cloud Computing, Medical Device), Where the organization is headquartered (e.g. 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. Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. These are high quality companies, essential to the national, regional, or global economy but whose fundamental qualities are underappreciated and undervalued by the market. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Investors in its most recent fund include the Washington State Retirement System, Minnesota State Board of Investment, Connecticut Retirement Plans & Trust Funds, Kansas Public Employees' Retirement Fund VI brings the firm's assets under management to more than $4.4 billion. Id. We work with successful motivated individuals to help them achieve their investment and wealth management objectives. 915 0 obj <> endobj 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. (quoting Bell Atl. . 987, 999-1000 (Bankr. Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $3 billion of private equity capital. [Amended Complaint, 57]. 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. Id. The firm's objective is to . Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. Casetext, Inc. and Casetext are not a law firm and do not provide legal advice. Wellspring CEO Bill Dawson is taking a leave of absence, the firm said Tuesday Last week a shocking lawsuit was filed against his son Christopher It claims he drugged and violently raped and. NEW YORK, Jan. 10, 2018 /PRNewswire/ -- Wellspring Capital Management LLC ("Wellspring") today announced the successful closing of Wellspring Capital Partners VI L.P. ("Fund VI") with capital commitments totaling the hard cap of $1.415 billion. Wellspring is a cautionary tale for the fiduciaries of a distressed or potentially distressed corporationparticularly with respect to negotiations around release and/or indemnification provisions for those same fiduciaries. The Court does not have to decide whether Prospect is a preexisting or a subsequent creditor. We charge a minimal base fee and the rest is performance fees we generate for clients and not on the amount of capital clients allocate. 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. Accordingly, SportCo began negotiations with certain of its lenders around a potential restructuring transaction. Note: This site is for informational purposes only. Revenue: $500 million to $1 billion (USD) Competitors: Unknown. 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). 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. These emails can hardly be considered negligent misrepresentations. View contacts for Wellspring Capital Management to access new leads and connect with decision-makers. 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. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. Practices: The Firm takes pride in its ability to marshal its resources quickly and focus on the issues that matter, resulting in speed and certainty during the acquisition process. For the reasons set forth below, under the law of either state, the plaintiff's first and second causes of action must be dismissed. Most of them do not even contain any concrete information about the proposed AcuSport purchase or the likelihood of the Borrowers' default. Oct. 14, 2021) (Stickles, J.) 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." Id. All business will get complaints. 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. Fund VI will continue to pursue Wellspring's investment objective to acquire or invest in middle-market companies that are well-positioned to capitalize on change and can benefit from Wellspring's operating and financial expertise. 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 For purposes of South Carolina law, the parties disagree whether Prospect was a preexisting creditor or a subsequent creditor. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. R. Civ. pursue new growth opportunities through strategic initiatives, operating improvements and add-on acquisitions. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through six private equity funds. REGISTRATION STATUS . Their most recent investment was on Jan 1, 2020, when Steele Solutions raised 23, 2006) (stating that some courts characterize fraudulent conveyance actions as tort actions, while others characterize them as matters in equity). However, the garage actually had only 402 parking spaces. 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. Using a sophisticated network of for-profits, shell corporations, and consultancies, Wellspring has poured out an incredible $1.1 billion into nonprofits, most of which is hidden from prying eyes in donor-advised funds. In Fall 2018, SportCo Holdings, Inc. (SportCo) was facing severe financial distress. It featured lower-priced clothing and was Gymboree's direct competitor for The Children's Place and Old Navy.. 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. The February 20, 2018 stated, "You're [sic] economics are going down and the risk of chapter is going up. David R. Duncan US Bankruptcy Judge District of South Carolina. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. PLEASE SEE THIS LINK FOR FULL DISCLAIMER: https://www.wellspringcapital.co.uk/disclaimer. There are no allegations in the amended complaint that the debtors' liabilities exceeded their assets at the time of the transfers. 1985). 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. [Amended Complaint, 32]. The defendants filed separate motions. Flipbooks. (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 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. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. Todd Boehly filed a joinder to the Wellspring Defendants' motion to dismiss. Therefore, the plaintiff argues that he is only required to establish constructive fraud. The plaintiff responds that the statements relate to presently existing facts and that opinions are actionable in a negligence context. Investment Philosophy; Target Investments; Portfolio Martin Davis, 72; Created Modern Paramount, "Financial Firm Wellspring Capital to Take Penthouse at 605 Third Avenue", "Wellspring Capital Management taps $1.45bn Fund VI for Cadence Petroleum Group buyout", "SupplyOne Acquires Fellow Packaging Distributor Romanow Container", "Healthcare & Life Sciences Private Equity Deal Tracker: Wellspring Acquires Pentec Health", https://en.wikipedia.org/w/index.php?title=Wellspring_Capital_Management&oldid=1118006247, This page was last edited on 24 October 2022, at 18:15. The parties disagree on what law should applyfederal or state, and further if state law applies, New York or South Carolina. 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. 2018) (distinguishing cases where the courts dismissed negligent misrepresentation claims based on "puffery" or founded solely on speculative statements regarding future profits as a result of proposed transactions, and finding that the misrepresentations at issue were actionable because they involved present facts). The firm's objective is to bring partnership, experience and value creation to each investment. R. Civ. Innovative Custom Brands, Inc. v. Minor, 2016 WL 308805, at *2 (S.D.N.Y. Regardless, market participantsand equity sponsors in particularshould view Wellspring as an important reminder as to how both process and substance matter in restructuring negotiations. As part of the debt management process, it said it would close 375 of its 1,300 stores. 3d 473, 506 (S.D.N.Y. 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. 2016) (citing numerous cases, recognizing disagreement among courts regarding whether fraudulent conveyance action is a tort action); MainStreet Bank v. Nat'l Excavating Corp., 791 F. Supp. As with the plaintiffs assertions around disinterested governance, such allegations may (or may not) bear any semblance to the actual facts. 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. There are different definitions of insolvency. e""8*&B Your livelihoodand your sanitydepend . 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. 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. Financial terms of the transaction were not disclosed. The assignment was executed in New York, but the personal property was located in South Carolina at the time the assignment was executed. %PDF-1.5 % [Amended Complaint, 31]. The District Court discussed the South Carolina Supreme Court's decision in Sheldon v. Blauvelt, 29 S.C. 453 (1888). These emails may be a lot of things, but negligent misrepresentations they are not. UniCourt uses cookies to improve your online experience, for more information please see our Privacy Policy. 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. 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. 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. Corporate Advocacy Program. In 2008, Wellspring Capital, through its fund Wellspring Capital Partners, acquired Ellett. Tow v. Rafizadeh (In re Cyrus II P'ship), 413 B.R. The firms objective is to bring partnership, experience and value creation to each investment. 1996)). 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 . WELLSPRING CAPITAL MANAGEMENT, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. 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. 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. Home; About Us; Investment Approach. 92], Todd Boehly [Docket No. Over $134 million of the loan proceeds were used to fund distributions to Wellspring Capital Partners, WCM GenPar IV, L.P., WCM GenPar IV GP, LLC, F. Hewitt Grant, Charles E. Walker, Jr., Todd Boehly, Bernard Ziomek, and Andrew Kupchik (collectively, the "Transferee Defendants"). 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. ~p03ngx1Ai63*oP 4TP3Nt'xn0R8tJ'a7D2P6ILky6L;0;0SUNrtd t ";Qb[K-Ii 1g%\i) IZ3uAH0J40v0xt0v40Xt8 y CJ3t@y`$21kL By continuing to use this website, you agree to UniCourts General Disclaimer, Terms of Service, 19.)1. . Type: Company - Private. Wellspring Capital Management is a leading private equity firm headquartered in New York. 544 and 550 and S.C. Code 27-23-10; and (3) negligent misrepresentations against Wellspring Capital, Mr. Carles, and Mr. Johnson. 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. We are motivated and incentivised to succeed. $46H$DrGHi`0I"DE$"J(aH! 6. D. Del. Later emails berate Prospect's representative for failing to agree to the AcuSport purchase more quickly. The first and second causes of action are dismissed. 962 0 obj <>stream Alexander Carles' and Bradley Johnson's arguments are limited to the negligent misrepresentation cause of action, the only cause of action asserted against them. 2d 317 (S.D.N.Y. The court must construe the allegations in the complaint in the light most favorable to the plaintiff. 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. 20-50554, 2021 WL 4823513 (Bankr. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. The plaintiff, Ronald J. Friedman, the trustee for the SportCo Creditors' Liquidation Trust, filed an omnibus response to the motions to dismiss [Docket No. . 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. 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 . Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. 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. Frustrated stakeholders can be further inclined, and incentivized, to view all corporate decisions with an eye towards litigation first through a 20/20 hindsight lens. 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. 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." You have to know whats happening with clients, competitors, practice areas, and industries. 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." Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. The firm prefers to invest through means of carveout, buyouts, add-on, public to private and growth capital. Exempt Reporting Advisers ("ERA") are investment advisers that are not required to register as investment advisers because they rely on certain exemptions from registration under sections 203 (l) and 203 (m) of the Investment Advisers Act of 1940 and related rules. When it comes to helping companies that show promise, Wellspring Capital Management is overflowing with support. Id. It identifies undervalued companies whose share price does not properly reflect the true value of the business. 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.
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