wellspring capital management lawsuit

Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . 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." Accordingly, Wellspring reinforces the importance of disinterested governance and arms length dealing in connection with the restructuring process. With respect to which state's law applies, the defendants argue that the elements required to find that a party is a third party beneficiary are all met in this case and therefore New York law, as specified in the Loan Agreement's and Amendments' choice of law provisions, should apply to the plaintiff's causes of action against them. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. Make your practice more effective and efficient with Casetexts legal research suite. 2010); Saifullah v. Johnson, 948 F.2d 1282, at *1 (4th Cir. [Amended Complaint, 57]. 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 In 2010, Bain Capital acquired the company for US$1.8 billion. 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. 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 [. Another email stated, in part: "Gotta get your interest? Similarly, Merritt Dredging suggests that federal law would apply to a section 548 cause of action, but that state law should apply to fraudulent conveyance claims based on state law. Id. 2009). Va. Mar. The defendants asserted common arguments in support of dismissal, but all arguments made in support of dismissal were not asserted by each defendant. 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. Wellspring Capital Management is a leading private equity firm headquartered in New York. 91], F. Hewitt Grant [Docket No. 93], and Bradley Johnson [Docket No. 90], Alexander E. Carles [Docket No. 609, 614 (Bankr. We look forward to carrying forward that vision and continuing our success in the years ahead.". 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. Contribute to chinapedia/wikipedia.en development by creating an account on GitHub. Crazy 8 was started in August 2007. 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. to hinder, delay, or defraud either present or future creditors." The February 20, 2018 stated, "You're [sic] economics are going down and the risk of chapter is going up. 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. 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. 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. %%EOF Adversary Proceeding No. Click here to login, 2023, Portfolio Media, Inc. | About | Contact Us | Legal Jobs | Advertise with Law360 | Careers at Law360 | Terms | Privacy Policy | Cookie Settings | Help | Site Map, Enter your details below and select your area(s) of interest to stay ahead of the curve and receive Law360's daily newsletters, Email (NOTE: Free email domains not supported). .JFY+h!Hkw;s"$ 4AuF~!D =j]4z*g7i>B 1NEDm @@,!ptz"Br}-rh>wI }9.&>5/n2n/OefX 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. You can help Wikipedia by expanding it. The Wellspring ruling was not appealed, nor has any trial occurred on this matter. Div. 3d 473, 506 (S.D.N.Y. The parties disagree on what law should applyfederal or state, and further if state law applies, New York or South Carolina. The assignment was executed in New York, but the personal property was located in South Carolina at the time the assignment was executed. 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. The company will explode Rich!" 112]. It is Bavaria's largest city and the third largest city in Germany (after Berlin and Hamburg). 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. Wellspring Capital is a boutique discretionary management service with a portfolio positioned for high performance. 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. 101 (32). 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. 544 and 550 and S.C. Code 27-23-10; and (3) negligent misrepresentations against Wellspring Capital, Mr. Carles, and Mr. Johnson. David R. Duncan US Bankruptcy Judge District of South Carolina. Less than a year later, the liquidation trustee sued Wellspring and related parties, alleging breaches of fiduciary duty of care and loyalty. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through six private equity funds. 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 Federal Rule of Bankruptcy Procedure 7012(b) provides that Federal Rule of Civil Procedure 12(b) applies in adversary proceedings. 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. Fund VI brings the firm's assets under management to more . In the legal profession, information is the key to success. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. After all, corporate decisionmakers are often tasked with choosing a path where outcomes are at best uncertain. The court considered whether the plaintiff had proved the tort of innocent misrepresentation. New York law and South Carolina law differed as to whether such a transfer was permitted. The. 0 The complaint must provide more than mere "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $3 billion of private equity capital. 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. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. After the defendants filed replies, the Court held a hearing on June 18, 2020. 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. Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $3 billion of private equity capital. Description. Wellspring also rejected in cursory fashion the defendants argument that it is not necessarily a breach . The defendants' motions rely on Federal Rule of Civil Procedure 12(b)(6). Headquarters Location Lever House 390 Park Avenue New York, New York, 10022, United States 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. These are high quality companies, essential to the national, regional, or global economy but whose fundamental qualities are underappreciated and undervalued by the market. 2022 Wellspring Capital Management Group LLC |. Tex. Investments Number of Investments 2 Wellspring Capital Management has made 2 investments. 22-2003, 2023 WL 1098189 (3d Cir. 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. endstream endobj startxref The plaintiff's first and second causes of action are based on 11 U.S.C. E-mail: sandra@wellspring-cap.com; Videos. Corporate Advocacy Program. 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. They were not statements of presently existing fact. In Fall 2018, SportCo Holdings, Inc. (SportCo) was facing severe financial distress. Wellsprings facts, as alleged, are fairly straightforward. 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. 1001 to 5000 Employees. 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. This approach has historically delivered returns well above inflation. 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. 2021 by wellspring capital Management. Use tab to navigate through the menu items. The defendants argue that as a subsequent creditor, Prospect is required to plead actual fraud, and the amended complaint fails to do so. 8h`6$67Xn@,`& The Court does not have to decide whether Prospect is a preexisting or a subsequent creditor. 2021 by wellspring capital 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. Wellspring Capital Management LLC operates as a private equity firm. Consumers want to see how a business took care of business. The court stated that expressions of opinion are actionable under New York law, but further stated: New York courts have also stated that statements of "mere puffery", or "statements founded entirely on speculation concerning future profits from proposed business endeavors" are not actionable. Discretionary portfolio management with a difference, Make your investment with Wellspring Capital Management. Home; About Us; Investment Approach. Ellett Brothers LLC ("Ellett"), a South Carolina limited liability company, was a sporting goods distributor. 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. Angel, Fund of Funds, Venture Capital), This describes the stage of investments made by this organization (e.g. 541, 546 (Bankr. Private equity firm Wellspring Capital Management has acquired Caring Brands International, parent company of home health and hospice franchise company Interim Healthcare, for an undisclosed amount. 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. If you want your business to survive, you need to understand your-self. Id. 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. . Full title:Ronald J. Friedman, as the trustee for the SportCo Creditors' Liquidation, Court:UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. 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." By continuing to use this website, you agree to UniCourts General Disclaimer, Terms of Service, Oct. 14, 2021) (Stickles, J.) 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. Mr. Friedman filed an amended complaint the same day. The Wellspring court dismissed the litigation trusts claim for breach of the fiduciary duty of care, holding that it was not adequately pled. WELLSPRING CAPITAL MANAGEMENT ( CRD # 135455/SEC#:801-64341 ) WELLSPRING CAPITAL MANAGEMENT, WELLSPRING CAPITAL MANAGEMENT, INC. View latest Form ADV filed Part 2 Brochures. Id. View contacts for Wellspring Capital Management to access new leads and connect with decision-makers. UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. 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 defendants' remaining arguments need not be addressed. 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. See Silvercreek Mgmt., Inc. v. Citigroup, Inc., 346 F. Supp. The District Court discussed the South Carolina Supreme Court's decision in Sheldon v. Blauvelt, 29 S.C. 453 (1888). The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. The principal and lead portfolio manager at Wellspring Capital is Avrohom Neumann. There are no allegations in the amended complaint that the debtors' liabilities exceeded their assets at the time of the transfers. In King County, the court considered suits by investors seeking to recover losses incurred after the collapse of a structured investment vehicle.

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