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. In an email obtained by . About Wellspring Capital Management Wellspring Capital Management is a leading private equity firm headquartered in New York. Oct. 14, 2021) (Stickles, J.) The alleged statements simply do not constitute actionable statements that can form the basis of a negligent misrepresentation claim. Therefore, a finding that Prospect is a subsequent creditor would require dismissal of the first and second causes of action. 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. The firm's objective is to bring partnership, experience and value creation to each investment. Asia Pacific; EMEA; Latin America; UK Solicitors; UK Bar; United States THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. Mar 19, 2019 New York private equity firm Wellspring Capital Management said Monday it has acquired Center for Diagnostic Imaging, a Minneapolis-based operator of MRI and CT scanners that. 1984) for the proposition that under New York law, opinions are actionable in a negligence context. 89], Charles E. Walker, Jr. [Docket No. %PDF-1.5 % 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. Aug. 27, 2020). Instead, they may form the basis for a negligent misrepresentation claim if the party making the misrepresentation possesses some special expertise (by way of his job title or position, for example), or has some special knowledge about the particular fact that is allegedly misrepresented. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). 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. They are simply not statements of preexisting fact that were false when made. 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 [. [Amended Complaint, 93]. Probitas Partners acted as exclusive placement agent and Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal counsel with respect to formation of Fund VI. 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. Many of the facts underlying the Wellspring decision are neither unique nor unusual. 19-80071-DD (Bankr. Bloomberg View columnist Barry Ritholtz looks at the people and ideas that shape markets, investing and business. Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. Wellspring Capital Management Fund Manager Website www.wellspringcapital.com Fund Category Private Equity Close Date 0000-00-00 Fund Family Wellspring Capital Partners Native Currency USD Fund Manager's Location 605 Third Avenue 44th Floor New York, NY 10158 United States +1 (212) 000-0000 Fund Domiciles Canada [Amended Complaint, 32]. After the defendants filed replies, the Court held a hearing on June 18, 2020. 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. 3d 473, 506 (S.D.N.Y. 24. 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. REGISTRATION STATUS . Time to Read: 6 minutes The Court does not have to decide whether Prospect is a preexisting or a subsequent creditor. 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. 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. Founded in 1995, Wellspring invests anywhere . While property interests are defined by state law in the absence of a compelling federal interest, the Court would look to the Bankruptcy Code in making a determination of whether property is property of the estate under section 541. 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. Marlow v. Oakland Gin Co. (In re The Julien Co.), 128 B.R. endstream endobj startxref Later emails berate Prospect's representative for failing to agree to the AcuSport purchase more quickly. Wellspring has one of the best track records in middle-market private equity; its people, capital and reputation bring certainty to transactions. 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. Id. Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. Id. They are not actionable. [Amended Complaint, 57]. Wellspring Capital Management, LLC; Wellspring Cap. 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. Otherwise you cannot get paid." Salaries posted anonymously by Wellspring Capital Management employees. 2d 317 (S.D.N.Y. Litigation. This article about a private equity or venture capital firm based in the United States is a stub. Please Update this case to get latest docket information. 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. 2021 by wellspring capital Management. Ellett used $54,860,549.74 of the First Amendment loan proceeds to fund distributions to the Transferee Defendants. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. Using a sophisticated network of for-profits, shell corporations, and consultancies, Wellspring has poured out an incredible $1.1 billion into nonprofits, most of which is hidden from prying eyes in donor-advised funds. [Amended Complaint, 54]. It is Bavaria's largest city and the third largest city in Germany (after Berlin and Hamburg). 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. hbbd``b`u@IHEX 3X "2A`V @B'Hl``bdV8 2h Founded in 1995, Wellspring Capital Management is a private equity firm headquartered in New York, New York. In 2010, Bain Capital acquired the company for US$1.8 billion. Wellspring is a cautionary tale for the fiduciaries of a distressed or potentially distressed corporationparticularly with respect to negotiations around release and/or indemnification provisions for those same fiduciaries. 90], Alexander E. Carles [Docket No. The firm's objective is to bring partnership, experience and value creation to each investment. 3d 341, 357 (D.S.C. 2d 520, 529 n.14 (E.D. 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. Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. Hiding negative complaints is only a Band-Aid. The case status is Pending - Other Pending. Wellspring CEO Bill Dawson is taking a leave of absence, the firm said Tuesday Last week a shocking lawsuit was filed against his son Christopher It claims he drugged and violently raped and. CDI's smaller Atlanta peer said to weigh sale in '18. at 613-14. 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. Lister v. NationsBank of Delaware, N.A., 329 S.C. 133, 143 (Ct. App. In April 2018, Prospect agreed to defer two quarters of cash interest payments. Contact:KekstMark Semer or Peter Hill212.521.4800, Cision Distribution 888-776-0942 S.D. Discretionary portfolio management with a difference, Make your investment with Wellspring Capital Management. Id. 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. 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. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . These facts, as recited in the complaint, are taken as true for purposes of the motions to dismiss. The elements of a negligent misrepresentation claim under New York law are: The plaintiff also cites King County, Washington v. IKB Deutsche Industriebank, 863 F. Supp. 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. Innovative Custom Brands, Inc. v. Minor, 2016 WL 308805, at *2 (S.D.N.Y. Musk Made a Mess at Twitter. Already a subscriber? Wellsprings facts, as alleged, are fairly straightforward. 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. Wellspring, 2021 WL 4823513, at *10. 1999)). 930 0 obj <>/Filter/FlateDecode/ID[<6781EE974E7B2C4D9274E8F359D28E60>]/Index[915 48]/Info 914 0 R/Length 80/Prev 600062/Root 916 0 R/Size 963/Type/XRef/W[1 2 1]>>stream Ellett Brothers LLC ("Ellett"), a South Carolina limited liability company, was a sporting goods distributor. The December 26, 2017 email stated, "So you will waive [your interest payments]. Id. Todd Boehly filed a joinder to the Wellspring Defendants' motion to dismiss. Note: This site is for informational purposes only. King County, 863 F. Supp.2d at 318. $46H$DrGHi`0I"DE$"J(aH! 23, 2006) (stating that some courts characterize fraudulent conveyance actions as tort actions, while others characterize them as matters in equity). UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. 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. It identifies undervalued companies whose share price does not properly reflect the true value of the business. 987, 999-1000 (Bankr. E-mail: sandra@wellspring-cap.com; Videos. Sec'y of State for Def. 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. 2008) (citing Southmark Corp. v. Crescent Heights VI, Inc. (In re Southmark Corp.), 95 F.3d 53, 53, n.7 (5th Cir. If you want your business to survive, you need to understand your-self. The Wellspring court was ruling on a motion to dismiss, and therefore accepted the plaintiffs somewhat barebones and perhaps self serving assertions as true and in the light most favorable to that plaintiff. Home; About Us; Investment Approach. The Court now issues this order, granting the motions to dismiss for the reasons set forth below. 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. [Amended Complaint, 31]. When typing in this field, a list of search results will appear and be automatically updated as you type. 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. 598, 614 (Bankr. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. 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. 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. For purposes of South Carolina law, the parties disagree whether Prospect was a preexisting creditor or a subsequent creditor. The company will explode Rich!" 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. Over the past 20 years, Wellspring has invested in over 35 platform investments across . 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. Wellspring Capital Management. Industry: Investment & Asset Management. 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. REGISTRATION STATUS. The adviser's REGISTRATION status is listed below. The defendants' motions rely on Federal Rule of Civil Procedure 12(b)(6). Their most recent acquisition was Caring Brands International on Oct 25, 2021. 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." The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. 6. articles a month for anyone to read, even non-subscribers! Another email stated, in part: "Gotta get your interest? hb```e``jb`a`\ @1V h`2q:lp10qfaqB,X3s10iH(^t1 New York law prohibits both actual and constructive fraudulent conveyances. 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." 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. 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. @S1 $82N+ZJ | Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. These emails can hardly be considered negligent misrepresentations. Cases involving other matters not classified elsewhere, 890, 1890, 1990, 2890, 2899, 2999, 3375, 3890, 3896, 3899, 3999, 4890, 4896, 4999, Wellspring Capital Management, LLC; Wellspring Cap v. Barry, III et al. Because the Court dismisses the complaint as to all other defendants, the Court sua sponte dismisses the causes of action against Mr. Ziomek as well. [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 middle-market private equity firm invests in companies with strong business . The first and second causes of action are dismissed. 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 February 20, 2018 stated, "You're [sic] economics are going down and the risk of chapter is going up. 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. There are different definitions of insolvency. Revenue: $500 million to $1 billion (USD) Competitors: Unknown. 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. Id. ), Create custom alerts for specific article and case topics and, I took a free trial but didn't get a verification email. 2021 by wellspring capital Management. P. 12(b)(6). 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"). Wellspring Capital Management is a leading private equity firm headquartered in New York. Regardless, market participantsand equity sponsors in particularshould view Wellspring as an important reminder as to how both process and substance matter in restructuring negotiations. 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.