A finding that Prospect is a preexisting creditor compels the same result. Will Others Follow? The plaintiff responds that the express terms of the choice of law provisions provide that the clause applies only to the parties to the Loan Agreements and the Amendments and that the defendants' indirect connection to the parties to the agreements, and the nature of their received benefit, a distribution, are not sufficient to render them third-party beneficiaries of the Loan Agreements and the Amendments. 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. 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. They are simply not statements of preexisting fact that were false when made. Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. at 613-14. 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. [cV3ljHkT/bx @A,20p1 ks The Court now issues this order, granting the motions to dismiss for the reasons set forth below. Accordingly, SportCo began negotiations with certain of its lenders around a potential restructuring transaction. Over the past 20 years, Wellspring has invested in over 35 platform investments across . The firm's objective is to bring partnership, experience and value creation to each investment. 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. 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. 2d 520, 529 n.14 (E.D. SaaS, Android, Cloud Computing, Medical Device), Where the organization is headquartered (e.g. 2021 by wellspring capital Management. The first and second causes of action are dismissed. Jan. 25, 2016) (alteration original). 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. Menu Home; Rankings. Otherwise you cannot get paid." [Amended Complaint, 51]. As with the plaintiffs assertions around disinterested governance, such allegations may (or may not) bear any semblance to the actual facts. 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. GitHub export from English Wikipedia. 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. [Amended Complaint, 32]. These all relate to a proposed business transactionthe purchase by Ellett of AcuSport. 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 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. R. Civ. Share Your Design Ideas, New JerseysMurphy Defends $10 Billion Rainy Day Fund as States Economy Slows, This Week in Crypto: Ukraine War, Marathon Digital, FTX. New York law and South Carolina law differed as to whether such a transfer was permitted. It is not unusual for an entity facing distress to engage with their stakeholders and to negotiate any number of transaction alternatives and terms. There are also no allegations concerning expenses. These facts, as recited in the complaint, are taken as true for purposes of the motions to dismiss. Financial terms of the transaction were not disclosed. (Wellspring). WELLSPRING CAPITAL MANAGEMENT ( CRD # 135455/SEC#:801-64341 ) WELLSPRING CAPITAL MANAGEMENT, WELLSPRING CAPITAL MANAGEMENT, INC. View latest Form ADV filed Part 2 Brochures. Founded in 1995, Wellspring Capital Management is a private equity firm headquartered in New York, New York. 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. %PDF-1.5 % About Wellspring Capital Management Wellspring Capital Management is a leading private equity firm headquartered in New York. 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. 915 0 obj <> endobj WELLSPRING CAPITAL MANAGEMENT LIMITED is registered in England and Wales under Company Number 12429146, PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. As part of the debt management process, it said it would close 375 of its 1,300 stores. 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. (quoting Bell Atl. It is Bavaria's largest city and the third largest city in Germany (after Berlin and Hamburg). Wellspring Capital Management is a middle-market private equity firm that has approximately $2 billion of private equity. The defendants' remaining arguments need not be addressed. The firm prefers to invest in the business services, industrial, packaging, healthcare services, restaurants . 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. 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." Full title:Ronald J. Friedman, as the trustee for the SportCo Creditors' Liquidation, Court:UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. The plaintiff's third cause of action, for negligent misrepresentation against defendants Wellspring Capital, Mr. Carles, and Mr. Johnson, must also be dismissed. Ellett used $54,860,549.74 of the First Amendment loan proceeds to fund distributions to the Transferee Defendants. Alexander Carles' and Bradley Johnson's arguments are limited to the negligent misrepresentation cause of action, the only cause of action asserted against them. 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. They were not statements of presently existing fact. The firm prefers to invest through means of carveout, buyouts, add-on, public to private and growth capital. 89], Charles E. Walker, Jr. [Docket No. 1991) (unpublished table decision). Federal Rule of Bankruptcy Procedure 7012(b) provides that Federal Rule of Civil Procedure 12(b) applies in adversary proceedings. At the conclusion of the hearing, the Court took the motions under advisement. 544 and 550 and S.C. Code 27-23-10; and (3) negligent misrepresentations against Wellspring Capital, Mr. Carles, and Mr. Johnson. Wellspring Capital is a boutique discretionary management service - with a portfolio positioned for high performance. Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $3 billion of private equity capital. Certain state securities regulatory authorities have similar exemptions based on . & Loan Ass'n of New York City, the plaintiff loaned funds to the defendant, secured by a mortgage on a parking garage. In Fall 2018, SportCo Holdings, Inc. (SportCo) was facing severe financial distress. Limited partners include leading pension funds, endowments, fund of funds and family offices from the U.S., Europe and Asia. 2009). D.S.C. . Id. 19-80071-DD (Bankr. In fact, the amended complaint states that the distributions at issue here were made in October 2012 and March 2013. The defendants argue that as a subsequent creditor, Prospect is required to plead actual fraud, and the amended complaint fails to do so. 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. 1999)). [Amended Complaint, 57]. W.D. The portfolio manager is also a co-investor in the strategy. & Loan Ass'n v. Hirschfeld, 476 N.Y.S.2d 292 (N.Y. App. 23, 2006) (stating that some courts characterize fraudulent conveyance actions as tort actions, while others characterize them as matters in equity). 1996)). 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. Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. 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. 2007) (citations omitted). Corp. v. Twombly, 550 U.S. 544, 555 (2007)). This approach has historically delivered returns well above inflation. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). 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 Fax: 877 376-7003. By teaming up with strong management, Wellspring is able to unlock underlying value and. For the reasons set forth below, under the law of either state, the plaintiff's first and second causes of action must be dismissed. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. 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 THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. By teaming up with strong management, Wellspring is able to unlock underlying value and If you want your business to survive, you need to understand your-self. 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. at 385. We are motivated and incentivised to succeed. Therefore, the plaintiff argues that he is only required to establish constructive fraud. 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. 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. The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. Wellspring Capital Management LLC operates as a private equity firm. The plaintiff's first and second causes of action are based on 11 U.S.C. After all, corporate decisionmakers are often tasked with choosing a path where outcomes are at best uncertain. Practices: Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. Wellspring has one of the best track records in middle-market private equity; its people, capital and reputation bring certainty to transactions. Type: Company - Private. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . Fund VI brings the firm's assets under management to more . Whether youre building capital for your family, retirement or other life goals, we can help you with our high conviction and disciplined investment style. 91], F. Hewitt Grant [Docket No. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through six private equity funds. 1997) (citing Bannister v. Hertz Corp., 316 S.C. 513 (Ct. App. 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). 1984) for the proposition that under New York law, opinions are actionable in a negligence context. 2021 by wellspring capital Management. 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. All rights reserved. Cancellation and Refund Policy, Privacy Policy, and articles a month for anyone to read, even non-subscribers! 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. 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. 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. 2008) (citing Southmark Corp. v. Crescent Heights VI, Inc. (In re Southmark Corp.), 95 F.3d 53, 53, n.7 (5th Cir. 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 [. 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. 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. hb```e``jb`a`\ @1V h`2q:lp10qfaqB,X3s10iH(^t1 at 382. 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. All business will get complaints. View Videos. Wellspring Capital Management is a leading private equity firm headquartered in New York. N.D.N.Y. 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 case status is Pending - Other Pending. This approach has historically delivered returns well above inflation Our clients endstream endobj startxref To summarize New York law, then, it appears that opinions can be actionable, but are not always actionable. Wellspring Capital Management Group LLC ("Wellspring"), a New York-based private equity firm, announced that on May 29, 2020, it closed the acquisition of Steele Solutions, Inc. ("SSI" or the "Company"), a value-add supplier into the industrial automation sector. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. 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. 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. Id. On December 31, 2018, the Borrowers defaulted on their obligations under the Loan Agreements and the Amendments. In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. 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 . Wellspring also rejected in cursory fashion the defendants argument that it is not necessarily a breach . These are high quality companies, essential to the national, regional, or global economy but whose fundamental qualities are underappreciated and undervalued by the market. 962 0 obj <>stream In Sheldon, the defendant, a New York citizen, assigned some personal property to Mr. Dickinson. SportCo later filed a free fall bankruptcy and liquidatedallegedly causing substantial losses for unsecured creditors that would not have occurred had SportCo accepted that agreement in principle allegedly reached in December 2018. However, the Court has the discretion to sua sponte dismiss a complaint pursuant to Fed. REGISTRATION STATUS. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. The firm's objective is to bring partnership, experience and value creation to each investment. at 382. In 2010, Bain Capital acquired the company for US$1.8 billion. The plaintiff responds that the statements relate to presently existing facts and that opinions are actionable in a negligence context. 541, 546 (Bankr. The Firm will consider buyouts of private companies, acquisitions of divisions or subsidiaries of public companies, shareholder liquidity needs, partnering with entrepreneurs for growth opportunities, and special situations. 22-2003, 2023 WL 1098189 (3d Cir. Oct. 14, 2021) (Stickles, J.) Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. The company will explode Rich!" Wellspring Capital is a boutique discretionary management service with a portfolio positioned for high performance. 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. Another email stated, in part: "Gotta get your interest? Designed By BM Designs. 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. 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. 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." Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. The basic complaint is that Wellspring directors put self-interests above those of the company and its creditors. A free inside look at Wellspring Capital Management salary trends based on 22 salaries wages for 17 jobs at Wellspring Capital Management. 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. 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. UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. Wellspring Capital Management prevailed in the sponsor-driven process for Center for Diagnostic Imaging, the country's largest private . 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. There are no allegations in the amended complaint that the debtors' liabilities exceeded their assets at the time of the transfers. Attorney advertising. 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 defendants' motions rely on Federal Rule of Civil Procedure 12(b)(6). Make your practice more effective and efficient with Casetexts legal research suite. Finally, in West Side Fed. The adviser's REGISTRATION status is listed below. 8h`6$67Xn@,`& Will His AI Plans Be Any Different? In King County, the court considered suits by investors seeking to recover losses incurred after the collapse of a structured investment vehicle. The issue in Merritt Dredging was the sale of a barge and the priority of parties' interests in the proceeds of the sale. 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. Wellspring has earned the reputation as a trusted, reliable partner and is often the preferred partner of a portfolio companys senior management team. *aUQBT&1#J$8Q)=WE9M'v1s_)GG+.kbN;yELi.UD1N{f'u$y`'GCJfS;4yXwbW${%^tcxG2}+/P@U `a$b6? Wellspring, founded in 1995, has raised more than $4 billion of capital commitments through six private equity funds, according to its website. These emails may be a lot of things, but negligent misrepresentations they are not. 6. CDI's smaller Atlanta peer said to weigh sale in '18. The amended complaint further states, "As recently as 2015, Ellett was the fifth largest private company in South Carolina and the largest distributor of firearms in the United States, with annual revenues of $750 million, over 350 employees nationwide, and 175 employees in South Carolina."
Sheet Pan Sausage And Potatoes Smitten Kitchen, Can I Use The Ordinary Niacinamide With Curology, Healing 'brick City Answer Key, Michael Sukkar Family, How Is The Mediterranean Sea Helpful To Archaeologists?, Articles W