wellspring capital management lawsuit

Practices: PLEASE SEE THIS LINK FOR FULL DISCLAIMER: This site is for informational purposes only. Wellspring Capital Management, LLC; Wellspring Cap. Wellspring Capital Management LLC operates as a private equity firm. 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. Copyright 2023 Ropes & Gray LLP. 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. Angel, Fund of Funds, Venture Capital), This describes the stage of investments made by this organization (e.g. My company, Asia Marketing and Management, has global ambitions but consists largely of me and the intelligence, experience, contacts, and per-sonality I bring to my clients . The Company specializes in private companies buyouts, acquisitions of divisions and subsidiaries of public companies, and going . [Amended Complaint, 37, 40]. The December 26, 2017 email stated, "So you will waive [your interest payments]. . 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. July 5, 2017). Wellspring Capital Management is a middle-market private equity financing firm. Discretionary portfolio management with a difference, Make your investment with Wellspring Capital Management. 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. R. Civ. The court stated: See Credit Alliance Corp. v. Arthur Anderson & Co., 65 N.Y.2d 536 (NY App. at 321. Designed By BM Designs. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. 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. 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. It identifies undervalued companies whose share price does not properly reflect the true value of the business. Make your practice more effective and efficient with Casetexts legal research suite. The. Wellspring targets investments with the following characteristics: Martin Davis, 72; Created Modern Paramount, "Financial Firm Wellspring Capital to Take Penthouse at 605 Third Avenue", "Wellspring Capital Management taps $1.45bn Fund VI for Cadence Petroleum Group buyout", "SupplyOne Acquires Fellow Packaging Distributor Romanow Container", "Healthcare & Life Sciences Private Equity Deal Tracker: Wellspring Acquires Pentec Health", https://en.wikipedia.org/w/index.php?title=Wellspring_Capital_Management&oldid=1118006247, This page was last edited on 24 October 2022, at 18:15. 2021 by wellspring capital Management. Wellspring Capital Management prevailed in the sponsor-driven process for Center for Diagnostic Imaging, the country's largest private . Note: This site is for informational purposes only. These all relate to a proposed business transactionthe purchase by Ellett of AcuSport. David Westin speaks with top names in finance about the week's biggest issues on Wall Street. These are high quality companies, essential to the national, regional, or global economy but whose fundamental qualities are underappreciated and undervalued by the market. 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. Wellspring Capital Management is a leading private equity firm headquartered in New York. Description. In King County, the court considered suits by investors seeking to recover losses incurred after the collapse of a structured investment vehicle. Contact:KekstMark Semer or Peter Hill212.521.4800, Cision Distribution 888-776-0942 Wellsprings investment professionals possess diverse and complementary backgrounds that combine valuable experience in private equity, restructuring, corporate finance, capital markets and corporate law. 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. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through . See Silvercreek Mgmt., Inc. v. Citigroup, Inc., 346 F. Supp. Ellett used $54,860,549.74 of the First Amendment loan proceeds to fund distributions to the Transferee Defendants. SportCos negotiations were led by a SportCo director, who was also the managing partner of Wellspring Capital, SportCos equity sponsor. 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." Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. 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. Wellspring Capital manages an investment portfolio of between 10 and 15 international stocks. 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. v. Holmes (In re Holmes), 610 B.R. Why is this public record being published online? 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. The defendants argue that in the event the Court finds the choice of law provision does not apply, South Carolina choice of law principles should be consulted to reach a finding that New York law applies. Posted By: Imright , 3/3/2023 9:31:52 PM. 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. Sav. 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. Their most recent acquisition was Caring Brands International on Oct 25, 2021. There are different definitions of insolvency. See Sheehan v. Saoud, 650 Fed. A second amendment to the Loan Agreements (the "Second Amendment") was executed on September 30, 2014. [Amended Complaint, 32]. Federal Rule of Bankruptcy Procedure 7012(b) provides that Federal Rule of Civil Procedure 12(b) applies in adversary proceedings. Ashmore for Wilson v. Dodds, 262 F. Supp. Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. Headquarters Location Lever House 390 Park Avenue New York, New York, 10022, United States Contribute to chinapedia/wikipedia.en development by creating an account on GitHub. The District Court in Ashmore for Wilson stated: The parties' arguments regarding what law applies to the plaintiff's fraudulent conveyance claims present some complicated and novel questions; however, it is not necessary for the Court to decide whether the defendants are third party beneficiaries of the Loan Agreements or the Amendments. For purposes of South Carolina law, the parties disagree whether Prospect was a preexisting creditor or a subsequent creditor. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). David R. Duncan US Bankruptcy Judge District of South Carolina. Therefore, the plaintiff argues that he is only required to establish constructive fraud. Attorney advertising. 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. Law360 provides the intelligence you need to remain an expert and beat the competition. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. Lister v. NationsBank of Delaware, N.A., 329 S.C. 133, 143 (Ct. App. 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. The adviser's REGISTRATION status is listed below. 2100 Geng Road, Suite 210 Palo Alto, CA 94303. The firm's objective is to bring partnership, experience and value creation to each investment. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. Asia Pacific; EMEA; Latin America; UK Solicitors; UK Bar; United States 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. Time to Read: 6 minutes The defendants argue that Prospect is a subsequent creditor, because it had knowledge of and approved of the distributions prior to them being completed. 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). All rights reserved. Over the past 20 years, Wellspring has invested in over 35 platform investments across . In June 2017, Gymboree announced it was filing for Chapter 11 bankruptcy protection. Further, if the statement is solely a speculative prediction about some potential business venture or course of action being contemplated, it is not actionable. 2012) and West Side Fed. Most of them do not even contain any concrete information about the proposed AcuSport purchase or the likelihood of the Borrowers' default. Fund VI brings the firm's assets under management to more than $4.4 billion. Bill Dawson is taking time off from his $2.2 billion private equity firm Wellspring Capital Management, which will investigate the claims of . Type: Company - Private. 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. 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. Their most recent investment was on Jan 1, 2020, when Steele Solutions raised pursue new growth opportunities through strategic initiatives, operating improvements and add-on acquisitions. 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. A free inside look at Wellspring Capital Management salary trends based on 22 salaries wages for 17 jobs at Wellspring Capital Management. The firm's objective is to . Less than a year later, the liquidation trustee sued Wellspring and related parties, alleging breaches of fiduciary duty of care and loyalty. 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. Regardless, market participantsand equity sponsors in particularshould view Wellspring as an important reminder as to how both process and substance matter in restructuring negotiations. The District Court discussed the South Carolina Supreme Court's decision in Sheldon v. Blauvelt, 29 S.C. 453 (1888). Try our Advanced Search for more refined results. Industry: Investment & Asset Management. The Wellspring Defendants asserted all of these arguments and also asserted failure to state a claim under section 550 against certain defendants. 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. 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. 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"). 1997) (citing Bannister v. Hertz Corp., 316 S.C. 513 (Ct. App. However, the Court has the discretion to sua sponte dismiss a complaint pursuant to Fed. All business will get complaints. 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. Finally, in West Side Fed. REGISTRATION STATUS. About Wellspring Capital Management Wellspring Capital Management is a leading private equity firm headquartered in New York. Whether youre building capital for your family, retirement or other life goals, we can help you with our high conviction and disciplined investment style. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through . (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 . The firm prefers to invest through means of carveout, buyouts, add-on, public to private and growth capital. 3d 473, 506 (S.D.N.Y. 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). 987, 999-1000 (Bankr. In early 2018, Wellspring Capital notified SportCo's secured lenders that SportCo would default on a $4.7 million interest payment due in the second quarter of 2018. Prior results do not guarantee a similar outcome. The emails, often using colorful language and harassing tones, essentially represent to Prospect that if the AcuSport transaction is not completed, Prospect will not get paid on its obligations. New York law prohibits both actual and constructive fraudulent conveyances. 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. When it comes to helping companies that show promise, Wellspring Capital Management is overflowing with support. at 382. We look forward to carrying forward that vision and continuing our success in the years ahead.". hXO8WtVH,~W"I/ {;N7'0HAA0%`Ih5L!p! Full title:Ronald J. Friedman, as the trustee for the SportCo Creditors' Liquidation, Court:UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. The Wellspring court dismissed the litigation trusts claim for breach of the fiduciary duty of care, holding that it was not adequately pled. 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. 915 0 obj <> endobj View Videos. Private equity firm Wellspring Capital Management LLC on Friday hit a slew of its insurers with a suit in New York state court alleging they must defend it against claims that it plundered . Id. 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. hb```e``jb`a`\ @1V h`2q:lp10qfaqB,X3s10iH(^t1 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. Wellspring Capital Management is a leading private equity firm headquartered in New York. Otherwise you cannot get paid." 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 firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. S.D. 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 plaintiff's third cause of action, for negligent misrepresentation against defendants Wellspring Capital, Mr. Carles, and Mr. Johnson, must also be dismissed. The origins of Wellspring Philanthropic Fund are shrouded. Revenue: $500 million to $1 billion (USD) Competitors: Unknown. At the conclusion of the hearing, the Court took the motions under advisement. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. 101 (32). The issue in Merritt Dredging was the sale of a barge and the priority of parties' interests in the proceeds of the sale. On December 31, 2018, the Borrowers defaulted on their obligations under the Loan Agreements and the Amendments. 1991) (unpublished table decision). Va. June 8, 2011) (acknowledging that Maryland law is not clear regarding whether a fraudulent conveyance action sounds in tort, but concluding that "given that the gravamen of the fraudulent conveyance claim is the wrongfulness of the conveyance and the injury to the creditor, rather than balancing equities or fairness, it is appropriate to conclude that fraudulent conveyance claims sound in tort. 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. to negotiate for release or indemnification, with the defendants arguing that such releases may have saved the post-restructuring company the expense of indemnifying the D&O Defendants in subsequent litigation. In the legal profession, information is the key to success. 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 [. ~p03ngx1Ai63*oP 4TP3Nt'xn0R8tJ'a7D2P6ILky6L;0;0SUNrtd t ";Qb[K-Ii 1g%\i) IZ3uAH0J40v0xt0v40Xt8 y CJ3t@y`$21kL Innovative Custom Brands, Inc. v. Minor, 2016 WL 308805, at *2 (S.D.N.Y. 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. In fact, the amended complaint states that the distributions at issue here were made in October 2012 and March 2013. They were not statements of presently existing fact. We are motivated and incentivised to succeed. 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. 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. endstream endobj 916 0 obj <>/Metadata 258 0 R/Pages 913 0 R/StructTreeRoot 384 0 R/Type/Catalog>> endobj 917 0 obj <>/MediaBox[0 0 612 792]/Parent 913 0 R/Resources<>/Font<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI]>>/Rotate 0/StructParents 0/Tabs/S/Type/Page>> endobj 918 0 obj <>stream 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. 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