Ellett achieved high sales and revenues and had significant operations until sometime in 2016, when its profits began to decrease. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. An actual fraudulent conveyance is any "conveyance made . 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. New York law prohibits both actual and constructive fraudulent conveyances. 22-2003, 2023 WL 1098189 (3d Cir. Business Restructuring, ~p03ngx1Ai63*oP 4TP3Nt'xn0R8tJ'a7D2P6ILky6L;0;0SUNrtd t ";Qb[K-Ii 1g%\i) IZ3uAH0J40v0xt0v40Xt8 y CJ3t@y`$21kL Tenn. 1991); 11 U.S.C. [Amended Complaint, 32]. PLEASE SEE THIS LINK FOR FULL DISCLAIMER: This site is for informational purposes only. Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. 2022 Wellspring Capital Management Group LLC |. *aUQBT&1#J$8Q)=WE9M'v1s_)GG+.kbN;yELi.UD1N{f'u$y`'GCJfS;4yXwbW${%^tcxG2}+/P@U `a$b6? 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. 91], Andrew Kupchik [Docket No. D. Del. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Angel, Fund of Funds, Venture Capital), This describes the stage of investments made by this organization (e.g. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 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. The defendants' motions to dismiss are granted. 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. King County, 863 F. Supp.2d at 318. 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." 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. Prior results do not guarantee a similar outcome. 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 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. 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. 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. 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. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. Mr. Friedman filed an amended complaint the same day. hbbd``b`u@IHEX 3X "2A`V @B'Hl``bdV8 2h 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. 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. Home; About Us; Investment Approach. 2021 by wellspring capital Management. 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. Wellspring Capital manages an investment portfolio of between 10 and 15 international stocks. If our offering sounds like something you would like to discuss, please get in touch on any of our contact details or the form below. 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. 2d 317 (S.D.N.Y. 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. Please see our Privacy Policy. Wellspring Capital Management. 2100 Geng Road, Suite 210 Palo Alto, CA 94303. 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. your most valuable capital, your ultimate resource. 23, 2006) (stating that some courts characterize fraudulent conveyance actions as tort actions, while others characterize them as matters in equity). 1001 to 5000 Employees. 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. [Amended Complaint, 57]. Why is this public record being published online? The firm's objective is to bring partnership, experience and value creation to each investment. Note: This site is for informational purposes only. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). 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. If you do not agree with these terms, then do not use our website and/or services. hb```e``jb`a`\ @1V h`2q:lp10qfaqB,X3s10iH(^t1 Mr. Friedman was substituted as the plaintiff on January 10, 2020. 1985). Law360 takes your privacy seriously. Adversary Proceeding No. San Francisco Bay Area, Silicon Valley), Operating Status of Organization e.g. . Va. Mar. Most of them do not even contain any concrete information about the proposed AcuSport purchase or the likelihood of the Borrowers' default. 19-80071-DD (Bankr. The issue in Merritt Dredging was the sale of a barge and the priority of parties' interests in the proceeds of the sale. For the reasons set forth below, under the law of either state, the plaintiff's first and second causes of action must be dismissed. D.S.C. 3d 473, 506 (S.D.N.Y. 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. The plaintiff's third cause of action, for negligent misrepresentation against defendants Wellspring Capital, Mr. Carles, and Mr. Johnson, must also be dismissed. The firm prefers to invest through means of carveout, buyouts, add-on, public to private and growth capital. Whether youre building capital for your family, retirement or other life goals, we can help you with our high conviction and disciplined investment style. See Scheidelman v. Henderson (In re Henderson), 423 B.R. The Wellspring ruling was not appealed, nor has any trial occurred on this matter. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. hXO8WtVH,~W"I/ {;N7'0HAA0%`Ih5L!p! 19.)1. The plaintiff does not dispute that the amended complaint does not plead actual fraud, and it clearly does not. UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. "[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.'" If you want your business to survive, you need to understand your-self. 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. R. Civ. 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. The Court does not have to decide whether Prospect is a preexisting or a subsequent creditor. Div. 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 Sav. 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. Their most recent investment was on Jan 1, 2020, when Steele Solutions raised 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. The company will explode Rich!" They are simply not statements of preexisting fact that were false when made. By teaming up with strong management, Wellspring is able to unlock underlying value and. The parties disagree on what law should applyfederal or state, and further if state law applies, New York or South Carolina. Id. 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. at 382. 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." Fund VI brings the firm's assets under management to more . 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"). When typing in this field, a list of search results will appear and be automatically updated as you type. In fact, the amended complaint states that the distributions at issue here were made in October 2012 and March 2013. Accordingly, SportCo began negotiations with certain of its lenders around a potential restructuring transaction. Sounds like a tidy deal at year end [2017] made a lot of sense." UniCourt uses cookies to improve your online experience, for more information please see our Privacy Policy. 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 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 District Court stated that "[w]hether a fraudulent conveyance claim should be characterized as a tort action is uncertain and disputed among American jurisdictions." 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. David R. Duncan US Bankruptcy Judge District of South Carolina. 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. 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. 2012) and West Side Fed. Sec'y of State for Def. The amended complaint further states that from October 2012 to October 2013, "Ellett achieved record sales and earned revenues of approximately $1.2 billion." New York law and South Carolina law differed as to whether such a transfer was permitted. 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." [cV3ljHkT/bx @A,20p1 ks Otherwise you cannot get paid." "To survive a motion to dismiss, 'a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face."'" This article about a private equity or venture capital firm based in the United States is a stub. 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. Make your practice more effective and efficient with Casetexts legal research suite. It identifies undervalued companies whose share price does not properly reflect the true value of the business. 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. 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 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. You can help Wikipedia by expanding it. Type: Company - Private. 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. Lister v. NationsBank of Delaware, N.A., 329 S.C. 133, 143 (Ct. App. Wellspring Capital Management is a middle-market private equity firm that has approximately $2 billion of private equity. At all times relevant to these claims, Wellspring Capital controlled (a) Wellspring Capital Partners At the conclusion of the hearing, the Court took the motions under advisement. Haynsworth Sinkler Boyd, P.A. Id. Wellspring Capital Management is a leading private equity firm headquartered in New York. 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. 91], F. Hewitt Grant [Docket No. articles a month for anyone to read, even non-subscribers! The alleged statements simply do not constitute actionable statements that can form the basis of a negligent misrepresentation claim. Wellspring has earned the reputation as a trusted, reliable partner and is often the preferred partner of a portfolio companys senior management team. This approach has historically delivered returns well above inflation. Oct. 14, 2021) (Stickles, J.) pursue new growth opportunities through strategic initiatives, operating improvements and add-on acquisitions. Try our Advanced Search for more refined results. 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. This approach has historically delivered returns well above inflation Our clients 987, 999-1000 (Bankr. A litigation trust formed through the SportCo bankruptcy then sued, among others, SportCos former directors and its equity sponsor. Asia Pacific; EMEA; Latin America; UK Solicitors; UK Bar; United States v. Holmes (In re Holmes), 610 B.R. There are no allegations in the amended complaint that the debtors' liabilities exceeded their assets at the time of the transfers. In Sheldon, the defendant, a New York citizen, assigned some personal property to Mr. Dickinson. 1994)). 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. 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 Partners of Wellspring constitute a long-tenured team, having worked together an average of 15 years over three funds. Id. 1997) (citing Bannister v. Hertz Corp., 316 S.C. 513 (Ct. App. 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. Will His AI Plans Be Any Different? Wellspring targets investments with the following characteristics: The District Court discussed the South Carolina Supreme Court's decision in Sheldon v. Blauvelt, 29 S.C. 453 (1888). James brought a civil suit against Trump in September, alleging the Trump organization had fraudulently inflated the value of . Accordingly, Wellspring reinforces the importance of disinterested governance and arms length dealing in connection with the restructuring process. 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. 2009). July 5, 2017). endstream endobj startxref 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. All rights reserved. S.D. [Amended Complaint, 51]. [Amended Complaint, 93]. 90], Alexander E. Carles [Docket No. By teaming up with strong management, Wellspring is able to unlock underlying value and For example, the October 27, 2017 email stated, "The only way to optimize is to merge with Acusport." Wellspring, founded in 1995, has raised more than $4 billion of capital commitments through six private equity funds, according to its website. Menu Home; Rankings. Litigation. 2010); Saifullah v. Johnson, 948 F.2d 1282, at *1 (4th Cir. In Wellspring, the Delaware bankruptcy court held that an alleged duty of loyalty breach could survive a motion to dismiss where: Bear in mind that alleged is the operative word here. 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. William F. Dawson, Jr., Chief Executive Officer of Wellspring, said, "My partners and I are pleased to complete the successful raising of Wellspring's sixth fund, which is a direct result of the strong relationships we have built with the investment community over many years and the returns we have generated. with actual intent . Many of the facts underlying the Wellspring decision are neither unique nor unusual. Wellspring brought its assets under management to more than $4.4 billion as of January 2018. The assignment was executed in New York, but the personal property was located in South Carolina at the time the assignment was executed. Jan. 30, 2023). The court must construe the allegations in the complaint in the light most favorable to the plaintiff. Revenue: $500 million to $1 billion (USD) Competitors: Unknown. Cancellation and Refund Policy, Privacy Policy, and 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. Another email stated, in part: "Gotta get your interest? In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. F. Hewitt Grant asserted the lack of a triggering creditor due to Prospect Capital Corporation's knowing participation in the transfers and failure to state a claim under New York law due to lack of insolvency and under South Carolina law due to failure to plead actual fraud. App'x 143 (4th Cir. 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. These emails may be a lot of things, but negligent misrepresentations they are not. 915 0 obj <> endobj In June 2017, Gymboree announced it was filing for Chapter 11 bankruptcy protection. 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. Bill Dawson is taking time off from his $2.2 billion private equity firm Wellspring Capital Management, which will investigate the claims of . Crazy 8 was started in August 2007. 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. Industry: Investment & Asset Management. Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $3 billion of private equity capital. Wellspring Capital Management, LLC; Wellspring Cap. WELLSPRING CAPITAL MANAGEMENT, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. 92], Todd Boehly [Docket No. Description. 598, 614 (Bankr. at 382. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. 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. Founded in 1995, Wellspring invests anywhere . at *3 (quoting In re Sharp Int'l Corp., 403 F.3d 43, 53 (2d Cir. 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. 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. Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. Federal Rule of Bankruptcy Procedure 7012(b) provides that Federal Rule of Civil Procedure 12(b) applies in adversary proceedings. 2007) (citations omitted). 544(b). 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. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). 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. The February 20, 2018 stated, "You're [sic] economics are going down and the risk of chapter is going up. 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. 20-50554, 2021 WL 4823513 (Bankr. 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." 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. In April 2018, Prospect agreed to defer two quarters of cash interest payments. Corporate Advocacy Program. Further, if the statement is solely a speculative prediction about some potential business venture or course of action being contemplated, it is not actionable. The firm's objective is to bring partnership, experience and value creation to each investment. ), Create custom alerts for specific article and case topics and, I took a free trial but didn't get a verification email. (Bloomberg) -- 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."We are taking this matter very seriously, and have launched an immediate internal investigation," Jeffrey Gould, Wellspring's head of marketing and investor .