wellspring capital management lawsuit

93], and Bradley Johnson [Docket No. Wellspring Capital is a boutique discretionary management service - with a portfolio positioned for high performance. Wellspring has earned the reputation as a trusted, reliable partner and is often the preferred partner of a portfolio companys senior management team. All rights reserved. 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. Jan. 30, 2023). 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. Please see our Privacy Policy. Sav. The issue in Merritt Dredging was the sale of a barge and the priority of parties' interests in the proceeds of the sale. The court stated: See Credit Alliance Corp. v. Arthur Anderson & Co., 65 N.Y.2d 536 (NY App. Prior results do not guarantee a similar outcome. Discretionary portfolio management with a difference, Make your investment with Wellspring Capital Management. . Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Your livelihoodand your sanitydepend . Probitas Partners acted as exclusive placement agent and Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal counsel with respect to formation of Fund VI. James brought a civil suit against Trump in September, alleging the Trump organization had fraudulently inflated the value of . The plaintiff does not dispute that the amended complaint does not plead actual fraud, and it clearly does not. [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]. The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. 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. As with the plaintiffs assertions around disinterested governance, such allegations may (or may not) bear any semblance to the actual facts. 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 Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. 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. Id. 2008) (citing Southmark Corp. v. Crescent Heights VI, Inc. (In re Southmark Corp.), 95 F.3d 53, 53, n.7 (5th Cir. A finding that Prospect is a preexisting creditor compels the same result. Whether youre building capital for your family, retirement or other life goals, we can help you with our high conviction and disciplined investment style. SaaS, Android, Cloud Computing, Medical Device), Where the organization is headquartered (e.g. Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. 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. The Wellspring ruling was not appealed, nor has any trial occurred on this matter. Wellspring, founded in 1995, has raised more than $4 billion of capital commitments through six private equity funds, according to its website. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. at 321. On December 31, 2018, the Borrowers defaulted on their obligations under the Loan Agreements and the Amendments. However, the Court has the discretion to sua sponte dismiss a complaint pursuant to Fed. 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. 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. 541, 546 (Bankr. P. 12(b)(6) provides for dismissal of an action if the complaint "fail[s] to state a claim upon which relief can be granted." 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. Id. Id. There are different definitions of insolvency. Full title:Ronald J. Friedman, as the trustee for the SportCo Creditors' Liquidation, Court:UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. The amended complaint contains no allegations that either Ellett, with respect to the first cause of action, or SportCo, with respect to the second cause of action, was insolvent at the time of the distributions or became, at the time of the transfers, insolvent as a result of the transfers. Fax: 877 376-7003. 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. On March 7, 2013, the Borrowers entered into a First Amendment to the Loan Agreements (the "First Amendment"), pursuant to which Prospect loaned the Borrowers an additional $60 million. By teaming up with strong management, Wellspring is able to unlock underlying value and. The emails, often using colorful language and harassing tones, essentially represent to Prospect that if the AcuSport transaction is not completed, Prospect will not get paid on its obligations. Alexander Carles' and Bradley Johnson's arguments are limited to the negligent misrepresentation cause of action, the only cause of action asserted against them. Prospect is a sophisticated party and, to the extent that it wanted to confirm the predictions made by Mr. Carles and Mr. Johnson were in fact accurate, it could have exercised due diligence. %PDF-1.5 % 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. The firm prefers to invest in the business services, industrial, packaging, healthcare services, restaurants . 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. 2021 by wellspring capital Management. CDI's smaller Atlanta peer said to weigh sale in '18. The assignment was executed in New York, but the personal property was located in South Carolina at the time the assignment was executed. UniCourt uses cookies to improve your online experience, for more information please see our Privacy Policy. When it comes to helping companies that show promise, Wellspring Capital Management is overflowing with support. The defendants argue that as a subsequent creditor, Prospect is required to plead actual fraud, and the amended complaint fails to do so. Todd Boehly filed a joinder to the Wellspring Defendants' motion to dismiss. Their most recent acquisition was Caring Brands International on Oct 25, 2021. Div. Type: Company - Private. 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. 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. 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. App'x 143 (4th Cir. [cV3ljHkT/bx @A,20p1 ks 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. 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. Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $3 billion of private equity capital. The. As part of the debt management process, it said it would close 375 of its 1,300 stores. pursue new growth opportunities through strategic initiatives, operating improvements and add-on acquisitions. Wellspring has the flexibility to complete transactions ranging from $100 million to as much as $1.5 billion in total value in a wide range of industries. Wellspring Capital Management is a leading private equity firm headquartered in New York. 598, 614 (Bankr. .JFY+h!Hkw;s"$ 4AuF~!D =j]4z*g7i>B 1NEDm @@,!ptz"Br}-rh>wI }9.&>5/n2n/OefX 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. at 382. Certain state securities regulatory authorities have similar exemptions based on . 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. Why is this public record being published online? The firm's objective is to bring partnership, experience and value creation to each investment. January 12, 2022 R. Civ. 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. Munich, German Mnchen, city, capital of Bavaria Land (state), southern Germany. Find More Contacts for Wellspring Capital Management, Edit Lists Featuring This Company Section, European Regulation Ushers In Global Future For Fundraising, Wellspring Capital Management Acquires Caring Brands International, Private Equity Firms with Investments in United States, Greater New York Area Investors with Funds Raised in 2017, Private Equity Firms with Investments in Asia. "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."'" 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). Id. Id. 915 0 obj <> endobj Time to Read: 6 minutes The Uniform Commercial Code defines insolvency as the inability to pay debts in the ordinary course or when they come due, while the Bankruptcy Code defines insolvency as debts exceeding assets. to hinder, delay, or defraud either present or future creditors." New York law regarding third party beneficiaries provides: With respect to South Carolina's choice of law analysis, South Carolina conflict of law principles provide that "the substantive law governing a tort action is determined by the state in which the injury occurred." 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. Our tight-knit culture enables transparent oversight and a streamlined decision-making process. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. 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. Designed By, https://www.wellspringcapital.co.uk/disclaimer. See Silvercreek Mgmt., Inc. v. Citigroup, Inc., 346 F. Supp. Try our Advanced Search for more refined results. 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. Wellsprings objective is to bring partnership, experience and value creation to each investment. 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. Bill Dawson is taking time off from his $2.2 billion private equity firm Wellspring Capital Management, which will investigate the claims of . The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. Accordingly, Wellspring reinforces the importance of disinterested governance and arms length dealing in connection with the restructuring process. [Amended Complaint, 49]. 90], Alexander E. Carles [Docket No. The Wellspring court dismissed the litigation trusts claim for breach of the fiduciary duty of care, holding that it was not adequately pled. 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. The principal and lead portfolio manager at Wellspring Capital is Avrohom Neumann. at *3 (quoting In re Sharp Int'l Corp., 403 F.3d 43, 53 (2d Cir. Amazon Pauses Construction on Second Headquarters in Virginia as It Cuts Jobs, Amazon Is Closing Its Cashierless Stores in NYC, San Francisco and Seattle, iPhone Maker Plans $700 Million India Plant in Shift From China, Stock Traders Are Ignoring Blaring Bond Alarms, S&P 500 Notches Best Week Since Late January: Markets Wrap. The defendants asserted common arguments in support of dismissal, but all arguments made in support of dismissal were not asserted by each defendant. 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. %%EOF Brought up in a family enjoying long-term success in real estate investment, Avrohom instead turned to the stock market. 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. Already a subscriber? Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. Hiding negative complaints is only a Band-Aid. SEC / JURISDICTION. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. The defendants' motions rely on Federal Rule of Civil Procedure 12(b)(6). Tex. Note: This site is for informational purposes only. 962 0 obj <>stream The court addressed the dissent's finding, that the defendant's determination of the number of parking spaces was a matter of judgment or opinion and was therefore unactionable. 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 . The court considered whether inaccurate credit ratings can form the basis for a negligent misrepresentation claim. REGISTRATION STATUS. Wellspring Capital Management is a leading private equity firm headquartered in New York. The Partners of Wellspring constitute a long-tenured team, having worked together an average of 15 years over three funds. To summarize New York law, then, it appears that opinions can be actionable, but are not always actionable. 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. Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $3 billion of private equity capital. Sav. & Loan Ass'n v. Hirschfeld, 476 N.Y.S.2d 292 (N.Y. App. 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." By teaming up with strong management, Wellspring is able to unlock underlying value and Corporate Advocacy Program. Crazy 8 was started in August 2007. 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. 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 . View Videos. These all relate to a proposed business transactionthe purchase by Ellett of AcuSport. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). 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. See Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 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.

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