Make your practice more effective and efficient with Casetexts legal research suite. at 358. Id. It identifies undervalued companies whose share price does not properly reflect the true value of the business. 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. Investments Number of Investments 2 Wellspring Capital Management has made 2 investments. 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. . 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. 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. Wellspring Capital Management is a middle-market private equity firm that has approximately $2 billion of private equity. 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 [. 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. 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 defendant represented to the plaintiff, and to an appraiser who performed an appraisal of the garage, that the parking garage had 500 parking spaces. at 321. An actual fraudulent conveyance is any "conveyance made . Prior results do not guarantee a similar outcome. R. Civ. D. Del. from 8 AM - 9 PM ET. Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. 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. 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. On December 31, 2018, the Borrowers defaulted on their obligations under the Loan Agreements and the Amendments. Mr. Friedman was substituted as the plaintiff on January 10, 2020. After the defendants filed replies, the Court held a hearing on June 18, 2020. Id. Our tight-knit culture enables transparent oversight and a streamlined decision-making process. In June 2017, Gymboree announced it was filing for Chapter 11 bankruptcy protection. Wellspring Capital Management has acquired 38 organizations. The middle-market private equity firm invests in companies with strong business . 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." %PDF-1.5 % 89], Charles E. Walker, Jr. [Docket No. 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. 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. 112]. 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. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. Wellsprings objective is to bring partnership, experience and value creation to each investment. The court must construe the allegations in the complaint in the light most favorable to the plaintiff. See Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. Marlow v. Oakland Gin Co. (In re The Julien Co.), 128 B.R. 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. January 12, 2022 THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. The principal and lead portfolio manager at Wellspring Capital is Avrohom Neumann. Fax: 877 376-7003. The origins of Wellspring Philanthropic Fund are shrouded. Since its founding in 1995, Wellspring has raised over $4.0 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." Contact:KekstMark Semer or Peter Hill212.521.4800, Cision Distribution 888-776-0942 v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 541, 546 (Bankr. Angel, Fund of Funds, Venture Capital), General contact email for the organization. The amended complaint is dismissed. Federal Rule of Bankruptcy Procedure 7012(b). 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. 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 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. Many of the facts underlying the Wellspring decision are neither unique nor unusual. In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. . They are simply not statements of preexisting fact that were false when made. 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. This preference is a result of the Firms differentiated and conservative approach to leverage, in addition to a transparent oversight model, which is driven by our small group of senior professionals and absence of bureaucracy. 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. As a result, the defendants argue, it would be unjust for Prospect to now be able to avoid the distributions. A finding that Prospect is a preexisting creditor compels the same result. %%EOF Whether youre building capital for your family, retirement or other life goals, we can help you with our high conviction and disciplined investment style. SEC / JURISDICTION. The adviser's REGISTRATION status is listed below. The firm's objective is to . Alexander Carles' and Bradley Johnson's arguments are limited to the negligent misrepresentation cause of action, the only cause of action asserted against them. 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. Hiding negative complaints is only a Band-Aid. The firm prefers to invest through means of carveout, buyouts, add-on, public to private and growth capital. About Wellspring Capital Management Wellspring Capital Management is a leading private equity firm headquartered in New York. 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. 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. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Wellspring Capital, through defendants Mr. Carles and Mr. Johnson, allegedly represented to Prospect that: (1) Ellett could purchase assets of AcuSport for $14.8 million; (2) the purchase would result in the Debtors' capturing 20% to 30% of AcuSport sales; (3) the Debtors could acquire $14 million of AcuSport inventory at a substantial discount; and (4) Ellett would immediately realize a $7 million profit on the sale of the inventory acquired in the purchase. There are also no allegations concerning expenses. 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. Id. Wellspring Capital Management is a leading private equity firm headquartered in New York. Wellspring Capital Management is a leading private equity firm headquartered in New York. 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. Jan. 30, 2023). 1001 to 5000 Employees. View contacts for Wellspring Capital Management to access new leads and connect with decision-makers. 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). 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 defendants filed separate motions. The firm's objective is to bring partnership, experience and value creation to each investment. 0 85]. (quoting Bell Atl. The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. Posted By: Imright , 3/3/2023 9:31:52 PM. Otherwise you cannot get paid." [Amended Complaint, 31]. Regardless, market participantsand equity sponsors in particularshould view Wellspring as an important reminder as to how both process and substance matter in restructuring negotiations. 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. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through . Id. UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. Attorney advertising. From reading the Financial Times at school to managing his first portfolio at just 18, he has built Wellspring Capital into a nationwide wealth management boutique. Id. (Wellspring). your most valuable capital, your ultimate resource. PLEASE SEE THIS LINK FOR FULL DISCLAIMER: https://www.wellspringcapital.co.uk/disclaimer. . 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. CDI's smaller Atlanta peer said to weigh sale in '18. Over the past 20 years, Wellspring has invested in over 35 platform investments across . The Partners of Wellspring constitute a long-tenured team, having worked together an average of 15 years over three funds. 92], Todd Boehly [Docket No. Wellspring Capital Management, LLC; Wellspring Cap. [Amended Complaint, 32]. In fact, the amended complaint states that the distributions at issue here were made in October 2012 and March 2013. 2005)). 1997) (citing Bannister v. Hertz Corp., 316 S.C. 513 (Ct. App. Asia Pacific; EMEA; Latin America; UK Solicitors; UK Bar; United States 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). Tenn. 1991); 11 U.S.C. When typing in this field, a list of search results will appear and be automatically updated as you type. App'x 143 (4th Cir. Their most recent investment was on Jan 1, 2020, when Steele Solutions raised By teaming up with strong management, Wellspring is able to unlock underlying value and The seller, PE outfit Levine Leichtman Capital Partners, purchased the company in 2015. 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. 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. at *3 (quoting In re Sharp Int'l Corp., 403 F.3d 43, 53 (2d Cir. Full title:Ronald J. Friedman, as the trustee for the SportCo Creditors' Liquidation, Court:UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. 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. The Loan Agreements and the First and Second Amendments each contain a choice of law provision, providing that New York law applies. We have interesting videos for you to watch on my site. Financial terms of the transaction were not disclosed. Sounds like a tidy deal at year end [2017] made a lot of sense." 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 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. We see how Bembury is able to walk the line of business convention while taking his art to new heights, turning ordinary items into extraordinary footwear. 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. 987, 999-1000 (Bankr. 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. 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. N.D.N.Y. S.D. The plaintiff responds that Prospect is a preexisting creditor because the distributions were not made until after Prospect became a creditor when the Loan Agreements and the Amendments were signed. 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. Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. Headquarters Location Lever House 390 Park Avenue New York, New York, 10022, United States Tex. Adversary Proceeding No. The firm's objective is to bring partnership, experience and value creation to each investment. The December 26, 2017 email stated, "So you will waive [your interest payments]. At Wellspring we pride ourselves on client service. When it comes to helping companies that show promise, Wellspring Capital Management is overflowing with support. 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. 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. Ellett used $54,860,549.74 of the First Amendment loan proceeds to fund distributions to the Transferee Defendants. 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. 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. hXO8WtVH,~W"I/ {;N7'0HAA0%`Ih5L!p! The firms objective is to bring partnership, experience and value creation to each investment. Please see our Privacy Policy. 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. On May 3, 2018, SportCo agreed to acquire AcuSport's assets in bankruptcy for $7 million. Id. 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. For purposes of South Carolina law, the parties disagree whether Prospect was a preexisting creditor or a subsequent creditor. [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]. 'Ov}b0. & Loan Ass'n v. Hirschfeld, 476 N.Y.S.2d 292 (N.Y. App. 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. Accordingly, Wellspring reinforces the importance of disinterested governance and arms length dealing in connection with the restructuring process. Investment Philosophy; Target Investments; Portfolio All business will get complaints. 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. 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. The February 20, 2018 stated, "You're [sic] economics are going down and the risk of chapter is going up. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. The Company specializes in private companies buyouts, acquisitions of divisions and subsidiaries of public companies, and going . It is Bavaria's largest city and the third largest city in Germany (after Berlin and Hamburg). Business Restructuring, Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . Lister v. NationsBank of Delaware, N.A., 329 S.C. 133, 143 (Ct. App. Fund VI brings the firm's assets under management to more . Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. The defendants' motions to dismiss are granted. 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. . Crazy 8 was started in August 2007. The plaintiff, Ronald J. Friedman, the trustee for the SportCo Creditors' Liquidation Trust, filed an omnibus response to the motions to dismiss [Docket No. 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. 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). "); Terry v. Walker, 2006 WL 736861, at *5 (W.D. 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. 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. In King County, the court considered suits by investors seeking to recover losses incurred after the collapse of a structured investment vehicle. These facts, as recited in the complaint, are taken as true for purposes of the motions to dismiss. Wellspring targets investments with the following characteristics: The plaintiff's first and second causes of action are based on 11 U.S.C. 915 0 obj <> endobj The Wellspring ruling was not appealed, nor has any trial occurred on this matter. 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. You can review interesting Flipbooks on my site. Tow v. Rafizadeh (In re Cyrus II P'ship), 413 B.R. PLEASE NOTE: A verification email will be sent to your address before you can access your trial. In Fall 2018, SportCo Holdings, Inc. (SportCo) was facing severe financial distress. 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. 598, 614 (Bankr. In 2010, Bain Capital acquired the company for US$1.8 billion. Haynsworth Sinkler Boyd, P.A. [Amended Complaint, 49]. The parties are in agreement that New York and South Carolina law regarding negligent misrepresentations are substantially similar and that as a result, the Court is not required to engage in a choice of law analysis as to the third cause of action. 93], and Bradley Johnson [Docket No. 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. 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. 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. The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. 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. To this end, Wellspring reinforces two key principles in particular: We encourage you to contact your Ropes & Gray team to discuss these matters more fully. 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. As with the plaintiffs assertions around disinterested governance, such allegations may (or may not) bear any semblance to the actual facts. The firm's objective is to bring partnership, experience and value creation to each investment. Type: Company - Private. They are not actionable. 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. A constructive fraudulent conveyance exists under New York law if the conveyance was made without fair consideration and "(1) the transferor is insolvent or will be rendered insolvent by the transfer in question; (2) the transferor is engaged in or is about to engage in a business transaction for which its remaining property constitutes unreasonably small capital; or (3) the transferor believes that it will incur debt beyond its ability to pay."