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. 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." 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. at 358. . Prior results do not guarantee a similar outcome. Wellspring Capital Management LLC operates as a private equity firm. Id. In Sheldon, the defendant, a New York citizen, assigned some personal property to Mr. Dickinson. 2021 by wellspring capital Management. Id. Wellspring Capital Management has acquired 38 organizations. 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 [. The defendants filed separate motions. See Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 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. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through . By Zachary Zagger (July 31, 2020, 9:56 PM EDT) -- Private equity firm Wellspring Capital Management LLC on Friday hit a slew of its insurers with a suit in New York state court alleging they must defend it against claims that it plundered millions of dollars from gun seller United Sporting Cos. Inc., which blamed its bankruptcy on Donald Trump's win in the 2016 election. Access to case data within articles (numbers, filings, courts, nature of suit, and more. Federal Rule of Bankruptcy Procedure 7012(b) provides that Federal Rule of Civil Procedure 12(b) applies in adversary proceedings. 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 The defendants argue that Prospect is a subsequent creditor, because it had knowledge of and approved of the distributions prior to them being completed. [4] Wellspring completed fundraising on its sixth fund in 2018 with $1.45 billion of investor commitments as a successor to its $1.2 billion 2011 Fund V.[3], Wellspring focuses on the packaging, healthcare, niche manufacturing and distribution sectors.[5][6]. Password (at least 8 characters required). Tenn. 1991); 11 U.S.C. 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. 2d 520, 529 n.14 (E.D. 1985). As part of the debt management process, it said it would close 375 of its 1,300 stores. Marlow v. Oakland Gin Co. (In re The Julien Co.), 128 B.R. Asia Pacific; EMEA; Latin America; UK Solicitors; UK Bar; United States 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. Their most recent investment was on Jan 1, 2020, when Steele Solutions raised While New York law and South Carolina law have slightly different tests for avoiding constructive fraudulent conveyances, there exists a common thread which is not satisfied hereinsolvency at the time of the transfer. 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. Accordingly, Wellspring reinforces the importance of disinterested governance and arms length dealing in connection with the restructuring process. 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. In 2008, Wellspring Capital, through its fund Wellspring Capital Partners, acquired Ellett. A free inside look at Wellspring Capital Management salary trends based on 22 salaries wages for 17 jobs at Wellspring Capital Management. 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. 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 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. Therefore, the plaintiff argues that he is only required to establish constructive fraud. As a result, the defendants argue, it would be unjust for Prospect to now be able to avoid the distributions. REGISTRATION STATUS . The Wellspring ruling was not appealed, nor has any trial occurred on this matter. The defendants argue that this cause of action must be dismissed because the alleged misrepresentations were forward-looking statements and opinions; therefore, they are not actionable and cannot form the basis for a negligent misrepresentation cause of action. 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. 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. 1996)). "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."'" Flipbooks. Wellspring Capital Management is a leading private equity firm headquartered in New York. 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. R. Civ. Wellspring Capital is a boutique discretionary management service with a portfolio positioned for high performance. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. 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. 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. Wellspring, 2021 WL 4823513, at *10. 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. Id. Crazy 8 was started in August 2007. 1991) (unpublished table decision). 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. The amended complaint further states that from October 2012 to October 2013, "Ellett achieved record sales and earned revenues of approximately $1.2 billion." At the conclusion of the hearing, the Court took the motions under advisement. Angel, Fund of Funds, Venture Capital), This describes the stage of investments made by this organization (e.g. 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. You can help Wikipedia by expanding it. SEC / JURISDICTION. Their most recent acquisition was Caring Brands International on Oct 25, 2021. 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 . Another email stated, in part: "Gotta get your interest? . 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. 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. This approach has historically delivered returns well above inflation Our clients Use tab to navigate through the menu items. You have to know whats happening with clients, competitors, practice areas, and industries. The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. Jan. 25, 2016) (alteration original). 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. 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. 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"). 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. 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. 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. 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 [Amended Complaint, 32]. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. 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. at 321. 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. . For purposes of South Carolina law, the parties disagree whether Prospect was a preexisting creditor or a subsequent creditor. 962 0 obj <>stream The parties disagree on what law should applyfederal or state, and further if state law applies, New York or South Carolina. 91], Andrew Kupchik [Docket No. In April 2018, Prospect agreed to defer two quarters of cash interest payments. In King County, the court considered suits by investors seeking to recover losses incurred after the collapse of a structured investment vehicle. 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. 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. Active, Closed, This describes the type of investor this organization is (e.g. Will His AI Plans Be Any Different? Over the past 20 years, Wellspring has invested in over 35 platform investments across . David R. Duncan US Bankruptcy Judge District of South Carolina. The defendants argue that New York law should apply, first, because the Loan Agreements and the First and Second Amendments contain choice of law provisions stating that New York law will apply and second, because South Carolina choice of law analysis dictates that New York law should apply. WELLSPRING CAPITAL MANAGEMENT, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. 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. In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. There are no allegations in the amended complaint that the debtors' liabilities exceeded their assets at the time of the transfers. Sec'y of State for Def. The plaintiff's first and second causes of action are based on 11 U.S.C. Innovative Custom Brands, Inc. v. Minor, 2016 WL 308805, at *2 (S.D.N.Y. Further, if the statement is solely a speculative prediction about some potential business venture or course of action being contemplated, it is not actionable. Bloomberg View columnist Barry Ritholtz looks at the people and ideas that shape markets, investing and business. The defendants asserted common arguments in support of dismissal, but all arguments made in support of dismissal were not asserted by each defendant. at 385. Your livelihoodand your sanitydepend . After all, corporate decisionmakers are often tasked with choosing a path where outcomes are at best uncertain. See Silvercreek Mgmt., Inc. v. Citigroup, Inc., 346 F. Supp. 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. The plaintiff's third cause of action, for negligent misrepresentation against defendants Wellspring Capital, Mr. Carles, and Mr. Johnson, must also be dismissed. This approach has historically delivered returns well above inflation. 544 and 550 and S.C. Code 27-23-10; and (3) negligent misrepresentations against Wellspring Capital, Mr. Carles, and Mr. Johnson. Will Others Follow? Id. W.D. 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. 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. 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. A social media content creator signed an agreement with Birchbox in May of 2022 and hadn't been paid the $2,500 due as of Jan. 24, despite several emails to the company. 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. Sav. Mr. Friedman filed an amended complaint the same day. Designed By BM Designs. Why is this public record being published online? Note: This site is for informational purposes only. 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 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. Phone: 650 729-8626. James brought a civil suit against Trump in September, alleging the Trump organization had fraudulently inflated the value of . 19-80071-DD (Bankr. The court stated: See Credit Alliance Corp. v. Arthur Anderson & Co., 65 N.Y.2d 536 (NY App. Financial terms of the transaction were not disclosed. Lister v. NationsBank of Delaware, N.A., 329 S.C. 133, 143 (Ct. App. [Amended Complaint, 37, 40]. 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." 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. For the reasons set forth below, under the law of either state, the plaintiff's first and second causes of action must be dismissed. 93], and Bradley Johnson [Docket No. 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. Wellspring Capital Management is a leading private equity firm headquartered in New York. 3d 341, 357 (D.S.C. to hinder, delay, or defraud either present or future creditors." Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. 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." 24. Wellspring also rejected in cursory fashion the defendants argument that it is not necessarily a breach . However, whether a fraudulent conveyance action is characterized as a tort action is unsettled. WELLSPRING CAPITAL MANAGEMENT LIMITED is registered in England and Wales under Company Number 12429146, PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Musk Made a Mess at Twitter. at 385. 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. Hiding negative complaints is only a Band-Aid. About Wellspring Capital Management Wellspring Capital Management is a leading private equity firm headquartered in New York. Munich, German Mnchen, city, capital of Bavaria Land (state), southern Germany. Salaries posted anonymously by Wellspring Capital Management employees. 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. 2021 by wellspring capital Management. 598, 614 (Bankr. The firm's objective is to bring partnership, experience and value creation to each investment. Wellspring Capital Management Group LLC ("Wellspring"), a New York-based private equity firm, announced that on May 29, 2020, it closed the acquisition of Steele Solutions, Inc. ("SSI" or the "Company"), a value-add supplier into the industrial automation sector. We have interesting videos for you to watch on my site. 112]. Law360 takes your privacy seriously. 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. at *3 (quoting In re Sharp Int'l Corp., 403 F.3d 43, 53 (2d Cir. 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. This article about a private equity or venture capital firm based in the United States is a stub. Todd Boehly filed a joinder to the Wellspring Defendants' motion to dismiss. Wellspring has one of the best track records in middle-market private equity; its people, capital and reputation bring certainty to transactions. 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. New York law and South Carolina law differed as to whether such a transfer was permitted. When typing in this field, a list of search results will appear and be automatically updated as you type. 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. [Amended Complaint, 51]. In fact, the amended complaint states that the distributions at issue here were made in October 2012 and March 2013. Certain state securities regulatory authorities have similar exemptions based on . Wellspring Capital Management is a leading private equity firm headquartered in New York. (quoting Bell Atl. N.D.N.Y. Headquarters Location Lever House 390 Park Avenue New York, New York, 10022, United States 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. 987, 999-1000 (Bankr. %%EOF Finally, one place to get all the court documents we need. . Id. 91], F. Hewitt Grant [Docket No. Id. "); Terry v. Walker, 2006 WL 736861, at *5 (W.D. Specifically, Mr. Carles and Mr. Johnson represented to Prospect that a purchase of AcuSport would result in: (1) Debtors' capturing 20 to 30 percent of AcuSport sales; (2) Acquisition of $14 million worth of AcuSport's inventory at a significant discount; and (3) Realization of an immediate $7 million profit from the sale of the inventory acquired in the purchase. 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. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 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. Type: Company - Private. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through six private equity funds. The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. New York law prohibits both actual and constructive fraudulent conveyances. Wellspring Capital, Mr. Carles, and Mr. Johnson were not insiders of AcuSport, and the amended complaint does not allege that they had any special knowledge or information about AcuSport that was not available to the public. 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). 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). 609, 614 (Bankr. These emails may be a lot of things, but negligent misrepresentations they are not. S.D. By continuing to use this website, you agree to UniCourts General Disclaimer, Terms of Service, 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. Make your practice more effective and efficient with Casetexts legal research suite.
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