wellspring capital management lawsuit

"To survive a motion to dismiss, 'a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face."'" Id. $46H$DrGHi`0I"DE$"J(aH! Id. The Loan Agreements and the First and Second Amendments each contain a choice of law provision, providing that New York law applies. Wellspring Capital Management is a leading private equity firm headquartered in New York. 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. Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American. The firm's objective is to . 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. Full title:Ronald J. Friedman, as the trustee for the SportCo Creditors' Liquidation, Court:UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. Founded in 1995, Wellspring Capital Management is a private equity firm headquartered in New York, New York. [Amended Complaint, 57]. to hinder, delay, or defraud either present or future creditors." 2021 by wellspring capital Management. at *3 (quoting In re Sharp Int'l Corp., 403 F.3d 43, 53 (2d Cir. An actual fraudulent conveyance is any "conveyance made . These are high quality companies, essential to the national, regional, or global economy but whose fundamental qualities are underappreciated and undervalued by the market. In King County, the court considered suits by investors seeking to recover losses incurred after the collapse of a structured investment vehicle. Finally, one place to get all the court documents we need. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. A litigation trust formed through the SportCo bankruptcy then sued, among others, SportCos former directors and its equity sponsor. 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. These emails can hardly be considered negligent misrepresentations. App'x 143 (4th Cir. 915 0 obj <> endobj King County, 863 F. Supp.2d at 318. N.D.N.Y. Middle Market Private Equity. 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. I Shall [Not] Be Released: Wellspring, Director Releases, breached their duty of care, since the directors refused to reasonably maximize corporate value by killing the restructuring on account of releases/indemnity (, breached their duty of loyalty, since they placed their own self-interests above those of their fiduciaries [. 'Ov}b0. Later emails berate Prospect's representative for failing to agree to the AcuSport purchase more quickly. However, the garage actually had only 402 parking spaces. Please Update this case to get latest docket information. 2009). 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 D. Del. 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. The firm prefers to invest in the business services, industrial, packaging, healthcare services, restaurants . Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through . Wellspring Capital Management is a leading private equity firm headquartered in New York. 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. See Scheidelman v. Henderson (In re Henderson), 423 B.R. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . Wellspring Capital Management has acquired 38 organizations. 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? Fund VI brings the firm's assets under management to more than $4.4 billion. endstream endobj 916 0 obj <>/Metadata 258 0 R/Pages 913 0 R/StructTreeRoot 384 0 R/Type/Catalog>> endobj 917 0 obj <>/MediaBox[0 0 612 792]/Parent 913 0 R/Resources<>/Font<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI]>>/Rotate 0/StructParents 0/Tabs/S/Type/Page>> endobj 918 0 obj <>stream endstream endobj startxref 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. 1984) for the proposition that under New York law, opinions are actionable in a negligence context. 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. Please see our Privacy Policy. Mr. Friedman filed an amended complaint the same day. 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. 24. By teaming up with strong management, Wellspring is able to unlock underlying value and. Type: Company - Private. In June 2017, Gymboree announced it was filing for Chapter 11 bankruptcy protection. Id. Id. Asia Pacific; EMEA; Latin America; UK Solicitors; UK Bar; United States In Wellspring, the Delaware bankruptcy court held that an alleged duty of loyalty breach could survive a motion to dismiss where: Bear in mind that alleged is the operative word here. 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. %PDF-1.5 % Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. articles a month for anyone to read, even non-subscribers! 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. As with the plaintiffs assertions around disinterested governance, such allegations may (or may not) bear any semblance to the actual facts. You have to know whats happening with clients, competitors, practice areas, and industries. Wellspring, 2021 WL 4823513, at *10. Posted By: Imright , 3/3/2023 9:31:52 PM. Their most recent investment was on Jan 1, 2020, when Steele Solutions raised 91], F. Hewitt Grant [Docket No. Jan. 30, 2023). By teaming up with strong management, Wellspring is able to unlock underlying value and 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. For the reasons set forth below, under the law of either state, the plaintiff's first and second causes of action must be dismissed. 2008) (citing Southmark Corp. v. Crescent Heights VI, Inc. (In re Southmark Corp.), 95 F.3d 53, 53, n.7 (5th Cir. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 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 A free inside look at Wellspring Capital Management salary trends based on 22 salaries wages for 17 jobs at Wellspring Capital Management. California Weighs $360,000 in Reparations to Eligible Black Residents. The case status is Pending - Other Pending. The December 26, 2017 email stated, "So you will waive [your interest payments]. The Court now issues this order, granting the motions to dismiss for the reasons set forth below. The Court addresses in this order only those arguments that clearly mandate dismissal. The principal and lead portfolio manager at Wellspring Capital is Avrohom Neumann. "[F]or purposes of Rule 12(b)(6), '[the court is] not required to accept as true the legal conclusions set forth in a plaintiff's complaint.'" About Wellspring Capital Management Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $4.4 billion of private equity capital. For the reasons set forth above, the first, second, and third causes of action set forth in the plaintiff's amended complaint fail to state claims for which relief can be granted. 2022 Wellspring Capital Management Group LLC |. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. In April 2018, Prospect agreed to defer two quarters of cash interest payments. If you want your business to survive, you need to understand your-self. In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. Ellett Brothers LLC ("Ellett"), a South Carolina limited liability company, was a sporting goods distributor. & Loan Ass'n of New York City, the plaintiff loaned funds to the defendant, secured by a mortgage on a parking garage. The court stated: See Credit Alliance Corp. v. Arthur Anderson & Co., 65 N.Y.2d 536 (NY App. The defendant represented to the plaintiff, and to an appraiser who performed an appraisal of the garage, that the parking garage had 500 parking spaces. Fund VI brings the firm's assets under management to more . 6. Its success is based on a portfolio that, since inception in 2014, has delivered double digit returns on an annualised basis. The Wellspring court dismissed the litigation trusts claim for breach of the fiduciary duty of care, holding that it was not adequately pled. 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. 101 (32). For example, the October 27, 2017 email stated, "The only way to optimize is to merge with Acusport." 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. Investment Philosophy; Target Investments; Portfolio This approach has historically delivered returns well above inflation Our clients 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. Wellspring Capital Management is a mega-sized private equity firm that focused on a variety of transaction situations. 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 legal team representing former President Donald Trump formally has requested a six-month delay in the civil case filed against him by New York Attorney General Letitia James. Wellspring Capital manages an investment portfolio of between 10 and 15 international stocks. 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). [Amended Complaint, 54]. hXO8WtVH,~W"I/ {;N7'0HAA0%`Ih5L!p! REGISTRATION STATUS . 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. Contribute to chinapedia/wikipedia.en development by creating an account on GitHub. The third cause of action asserts that those parties "made numerous representations to Prospect concerning the AcuSport Purchase, including that the purchase would allow the Debtors to acquire $14 million worth of AcuSport inventory at a substantial discount; that it would result in the Debtors' immediate realization of a $7 million profit on the sale of the AcuSport inventory so purchased; and that it would result in the Debtors' capturing 20% to 30% of AcuSport sales." 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). 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. 598, 614 (Bankr. The defendants' motions rely on Federal Rule of Civil Procedure 12(b)(6). The defendants argue that Prospect is a subsequent creditor, because it had knowledge of and approved of the distributions prior to them being completed. Therefore, the plaintiff argues that he is only required to establish constructive fraud. 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. 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. . from 8 AM - 9 PM ET. 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. Menu Home; Rankings. When it comes to helping companies that show promise, Wellspring Capital Management is overflowing with support. Musk Made a Mess at Twitter. Regardless, market participantsand equity sponsors in particularshould view Wellspring as an important reminder as to how both process and substance matter in restructuring negotiations. 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. Id. The Court further notes that here, section 548 is not available to the plaintiff due to the timing of the transfers and the bankruptcy filings. In 2010, Bain Capital acquired the company for US$1.8 billion. 112]. 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." at 385. 22-2003, 2023 WL 1098189 (3d Cir. Adversary Proceeding No. Div. Wellspring Capital Management LLC operates as a private equity firm. Brought up in a family enjoying long-term success in real estate investment, Avrohom instead turned to the stock market. The basic complaint is that Wellspring directors put self-interests above those of the company and its creditors. 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. 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. 1985). Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. 2d 317 (S.D.N.Y. WELLSPRING CAPITAL MANAGEMENT ( CRD # 135455/SEC#:801-64341 ) WELLSPRING CAPITAL MANAGEMENT, WELLSPRING CAPITAL MANAGEMENT, INC. View latest Form ADV filed Part 2 Brochures. . Wellsprings facts, as alleged, are fairly straightforward. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. They are simply not statements of preexisting fact that were false when made. 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." The seller, PE outfit Levine Leichtman Capital Partners, purchased the company in 2015. Designed By, https://www.wellspringcapital.co.uk/disclaimer. Many of the facts underlying the Wellspring decision are neither unique nor unusual. For purposes of South Carolina law, the parties disagree whether Prospect was a preexisting creditor or a subsequent creditor. The company will explode Rich!" The defendants filed separate motions. 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. 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. 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." Attorney advertising. 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. Why is this public record being published online? 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. Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. Id. The District Court in Ashmore for Wilson stated: The parties' arguments regarding what law applies to the plaintiff's fraudulent conveyance claims present some complicated and novel questions; however, it is not necessary for the Court to decide whether the defendants are third party beneficiaries of the Loan Agreements or the Amendments. 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. Active, Closed, This describes the type of investor this organization is (e.g. 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. [Amended Complaint, 49]. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. 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 portfolio manager is also a co-investor in the strategy. You can review interesting Flipbooks on my site. We believe that this breadth and depth of experience enables the team to efficiently evaluate and complete acquisition opportunities across a broad range of industries. Probitas Partners acted as exclusive placement agent and Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal counsel with respect to formation of Fund VI. See Silvercreek Mgmt., Inc. v. Citigroup, Inc., 346 F. Supp. In Sheldon, the defendant, a New York citizen, assigned some personal property to Mr. Dickinson. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. Phone: 650 729-8626. Ashmore for Wilson v. Dodds, 262 F. Supp. Over the past 27 years, Wellspring has invested in over 50 platform investments and completed over 80 add-on acquisitions across various segments of the U.S. and global economies. Sec'y of State for Def. 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. 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, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. The firms objective is to bring partnership, experience and value creation to each investment. The defendants argue that as a subsequent creditor, Prospect is required to plead actual fraud, and the amended complaint fails to do so. Ellett used $54,860,549.74 of the First Amendment loan proceeds to fund distributions to the Transferee Defendants. A second amendment to the Loan Agreements (the "Second Amendment") was executed on September 30, 2014. 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 Partners of Wellspring constitute a long-tenured team, having worked together an average of 15 years over three funds. Industry: Investment & Asset Management. 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. 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 . The first and second causes of action are dismissed. to negotiate for release or indemnification, with the defendants arguing that such releases may have saved the post-restructuring company the expense of indemnifying the D&O Defendants in subsequent litigation. & Loan Ass'n v. Hirschfeld, 476 N.Y.S.2d 292 (N.Y. App.