wellspring capital management lawsuit

), Create custom alerts for specific article and case topics and, I took a free trial but didn't get a verification email. Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. Wellspring targets investments with the following characteristics: Reputation Management. 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. 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. The plaintiff's first and second causes of action are based on 11 U.S.C. The defendants' motions to dismiss are 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. 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. As a result, the defendants argue, it would be unjust for Prospect to now be able to avoid the distributions. Wellspring Capital Management is a leading private equity firm headquartered in New York. 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. On May 3, 2018, SportCo agreed to acquire AcuSport's assets in bankruptcy for $7 million. 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. Charles E. Walker, Jr. argued in support of dismissal due to lack of a triggering creditor based on Prospect's secured status, failure to state a claim under New York law due to lack of insolvency, on equity grounds because Prospect failed to obtain a personal guaranty from Mr. Walker and because the distributions were specifically contemplated by the loan transaction, and due to failure to state a claim for fraudulent conveyance under South Carolina law. articles a month for anyone to read, even non-subscribers! To summarize New York law, then, it appears that opinions can be actionable, but are not always actionable. 90], Alexander E. Carles [Docket No. New York law prohibits both actual and constructive fraudulent conveyances. 24. See Scheidelman v. Henderson (In re Henderson), 423 B.R. REGISTRATION STATUS. Wellspring has one of the best track records in middle-market private equity; its people, capital and reputation bring certainty to transactions. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). R. Civ. 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. %%EOF 1991) (unpublished table decision). 2022 Wellspring Capital Management Group LLC |. D.S.C. 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. 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. The parties disagree on what law should applyfederal or state, and further if state law applies, New York or South Carolina. Id. . 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"). In the legal profession, information is the key to success. 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. Angel, Fund of Funds, Venture Capital), This describes the stage of investments made by this organization (e.g. 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. See Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 544 and 550 and S.C. Code 27-23-10; and (3) negligent misrepresentations against Wellspring Capital, Mr. Carles, and Mr. Johnson. Lister v. NationsBank of Delaware, N.A., 329 S.C. 133, 143 (Ct. App. Jan. 25, 2016) (alteration original). 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. Corporate Advocacy Program. Consumers want to see how a business took care of business. Cancellation and Refund Policy, Privacy Policy, and App'x 143 (4th Cir. Public Records Policy. 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." from 8 AM - 9 PM ET. The firm's objective is to bring partnership, experience and value creation to each investment. The Court now issues this order, granting the motions to dismiss for the reasons set forth below. These all relate to a proposed business transactionthe purchase by Ellett of AcuSport. 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. 1997) (citing Bannister v. Hertz Corp., 316 S.C. 513 (Ct. App. For example, the October 27, 2017 email stated, "The only way to optimize is to merge with Acusport." 598, 614 (Bankr. EFFECTIVE DATE; SEC: Terminated: 3/2/2007: "[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.'" This is despite the fact that 57% of Californians and 37% of California Democrats do not want President Joe Biden to run, according to a poll from the Berkeley Institute of Governmental Studies. The Partners of Wellspring constitute a long-tenured team, having worked together an average of 15 years over three funds. Note: This site is for informational purposes only. Why is this public record being published online? January 12, 2022 with actual intent . 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). Try our Advanced Search for more refined results. The company will explode Rich!" 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. 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. 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 A former Wellspring Capital Management employee filed a lawsuit against the son of Wellspring chief executive Bill Dawson, alleging that he raped her and that Bill Dawson threatened to. Id. Fed. D.S.C. 2100 Geng Road, Suite 210 Palo Alto, CA 94303. 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." 89], Charles E. Walker, Jr. [Docket No. 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. This is the best way to manage and repair your business reputation. Will Others Follow? [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 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. Adversary Proceeding No. Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. Ellett Brothers LLC ("Ellett"), a South Carolina limited liability company, was a sporting goods distributor. 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 court considered whether the plaintiff had proved the tort of innocent misrepresentation. Law360 provides the intelligence you need to remain an expert and beat the competition. at 385. . Another email stated, in part: "Gotta get your interest? If you want your business to survive, you need to understand your-self. In June 2017, Gymboree announced it was filing for Chapter 11 bankruptcy protection. W.D. July 5, 2017). Already a subscriber? Id. Less than a year later, the liquidation trustee sued Wellspring and related parties, alleging breaches of fiduciary duty of care and loyalty. at *3 (quoting In re Sharp Int'l Corp., 403 F.3d 43, 53 (2d Cir. As we here at Ropes & Gray look back on 2021 and ahead into 2022, we call your attention to the lessons of Friedman v. Wellspring Capital Mgmt., LLC (In re SportCo Holdings, Inc.), Case No. 8h`6$67Xn@,`& But Wellspring would arguably undermine the ability to negotiate for what are customary and, indeed, necessary protections for corporate decisionmakers in those same transactions, such as releases, indemnity, or exculpation. Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. The Wellspring court dismissed the litigation trusts claim for breach of the fiduciary duty of care, holding that it was not adequately pled. Investment Approach Target Investments Wellspring's objective is to acquire or invest in companies that are well-positioned to capitalize on change and can benefit from Wellspring's operating and financial expertise. They were not statements of presently existing fact. James brought a civil suit against Trump in September, alleging the Trump organization had fraudulently inflated the value of . 2d 520, 529 n.14 (E.D. 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. The court stated: See Credit Alliance Corp. v. Arthur Anderson & Co., 65 N.Y.2d 536 (NY App. 112]. GitHub export from English Wikipedia. The origins of Wellspring Philanthropic Fund are shrouded. 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. The principal and lead portfolio manager at Wellspring Capital is Avrohom Neumann. Fund VI brings the firm's assets under management to more than $4.4 billion. In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. "); Terry v. Walker, 2006 WL 736861, at *5 (W.D. Active, Closed, This describes the type of investor this organization is (e.g. 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. The defendants asserted common arguments in support of dismissal, but all arguments made in support of dismissal were not asserted by each defendant. The District Court discussed the South Carolina Supreme Court's decision in Sheldon v. Blauvelt, 29 S.C. 453 (1888). Accordingly, SportCo began negotiations with certain of its lenders around a potential restructuring transaction. 2008) (citing Southmark Corp. v. Crescent Heights VI, Inc. (In re Southmark Corp.), 95 F.3d 53, 53, n.7 (5th Cir. Whether youre building capital for your family, retirement or other life goals, we can help you with our high conviction and disciplined investment style. Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. Id. The firm prefers to invest in the business services, industrial, packaging, healthcare services, restaurants . See Sheehan v. Saoud, 650 Fed. 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. Further, if the statement is solely a speculative prediction about some potential business venture or course of action being contemplated, it is not actionable. However, the Court has the discretion to sua sponte dismiss a complaint pursuant to Fed. Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. The court must construe the allegations in the complaint in the light most favorable to the plaintiff. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. We are motivated and incentivised to succeed. Federal Rule of Bankruptcy Procedure 7012(b) provides that Federal Rule of Civil Procedure 12(b) applies in adversary proceedings. 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. Prior results do not guarantee a similar outcome. You can review interesting Flipbooks on my site. 1985). View Videos. [Amended Complaint, 49]. Founded in 1995, Wellspring Capital Management is a private equity firm headquartered in New York, New York. 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. 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. Aug. 27, 2020). Founded in 1995, Wellspring invests anywhere . Twitter Revenue, Earnings Fell About 40% in December, WSJ Says, John Malone andCharter Directors Agree to $87.5 Million Settlement, China E-Commerce Giant JD Set for $1.4 Billion Discount Spree, Between Rounds of Golf, Trumps Searching for the Perfect DeSantis Diss, Your Saturday UK Briefing: Sunak Chalks Up a Win as the Budget Looms, Harrods Shrugs Off Recession Fears as Rich Get Richer, FT Says, Wealthy NYC Family Feuds Over $258 Million Madison Avenue Sale, Tom Sizemore, 'Saving Private Ryan' Actor, Dies at 61, The Exhibit Reality TV Show PittingArtist Against ArtistIs No Masterpiece. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. At Wellspring we pride ourselves on client service. Id. 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. Copyright 2023 Ropes & Gray LLP. Innovative Custom Brands, Inc. v. Minor, 2016 WL 308805, at *2 (S.D.N.Y. Wellspring Capital Management is a middle-market private equity firm that has approximately $2 billion of private equity. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. 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. By continuing to use this website, you agree to UniCourts General Disclaimer, Terms of Service, 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 . Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. Total number of employee profiles an organization has on Crunchbase, Total number of Crunchbase contacts associated with this organization, Descriptive keyword for an Organization (e.g. 6. 92], Todd Boehly [Docket No. Finally, in West Side Fed. Wellspring Capital Management is a leading private equity firm headquartered in New York. UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. 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. Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American. $46H$DrGHi`0I"DE$"J(aH! 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. Sav. They are not actionable. at 385. Id. SaaS, Android, Cloud Computing, Medical Device), Where the organization is headquartered (e.g. 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. 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. 85]. Regardless, market participantsand equity sponsors in particularshould view Wellspring as an important reminder as to how both process and substance matter in restructuring negotiations. If you do not agree with these terms, then do not use our website and/or services. 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. The December 26, 2017 email stated, "So you will waive [your interest payments]. Wellspring Capital Management is a leading private equity firm headquartered in New York. Id. [Amended Complaint, 32]. 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. PLEASE NOTE: A verification email will be sent to your address before you can access your trial. A customer lawsuit filed earlier this month against Sequoia, Paradigm, and Thoma Bravo, alleges these funds gave an "air of legitimacy" to FTX andvia their hundreds of millions in funding and. 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. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through . These emails can hardly be considered negligent misrepresentations. 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. at 321. The amended complaint further states that from October 2012 to October 2013, "Ellett achieved record sales and earned revenues of approximately $1.2 billion." Salaries posted anonymously by Wellspring Capital Management employees. In Wellsprings view, the extent to which releases might have benefitted SportCo (as opposed to benefiting the directors alone) was at least in part a question of fact that could not be resolved on a motion to dismiss. 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). All rights reserved. e""8*&B Accordingly, Wellspring did not find that the defendants in fact breached their duties, but rather held that the plaintiff, a litigation trust, had asserted a viable claim that could proceed to a trier of fact. There are also no allegations concerning expenses. After the defendants filed replies, the Court held a hearing on June 18, 2020. They are simply not statements of preexisting fact that were false when 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. The basic complaint is that Wellspring directors put self-interests above those of the company and its creditors. R. Civ. Finally, one place to get all the court documents we need. 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. S.D. Tex. 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. 2012) and West Side Fed. This article about a private equity or venture capital firm based in the United States is a stub. 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. 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. Time to Read: 6 minutes . The Court addresses in this order only those arguments that clearly mandate dismissal. A former employee of Wellspring Capital Management filed a lawsuit in a New York Thursday alleging that the CEO's son, Christopher Dawson, drugged and repeatedly raped her one night in the.

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