The seller, PE outfit Levine Leichtman Capital Partners, purchased the company in 2015. Wellspring targets investments with the following characteristics: 2d 317 (S.D.N.Y. Id. Todd Boehly filed a joinder to the Wellspring Defendants' motion to dismiss. Id. Asia Pacific; EMEA; Latin America; UK Solicitors; UK Bar; United States Home; About Us; Investment Approach. NEW YORK, Jan. 10, 2018 /PRNewswire/ -- Wellspring Capital Management LLC ("Wellspring") today announced the successful closing of Wellspring Capital Partners VI L.P. ("Fund VI") with capital commitments totaling the hard cap of $1.415 billion. Flipbooks. The defendants filed separate motions. Copyright 2023 Ropes & Gray LLP. Read More Key Principal: William Dawson Junior See more contacts Industry: Management investment, open-end Printer Friendly View Address: 605 3RD Ave FL 44 New York, NY, 10158-0011 United States See other locations Phone: Website: www.wellspringcapital.com Employees (this site): Actual Relevant here: the plaintiff/litigation trust alleged that SportCos directors: Finally, the litigation trust also asserted a variety of other counts in its complaint related to other facts, circumstances, and actions that are not the subject of this Alert. At Wellspring we pride ourselves on client service. However, the Court has the discretion to sua sponte dismiss a complaint pursuant to Fed. New York law prohibits both actual and constructive fraudulent conveyances. 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 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. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. at 321. 92], Todd Boehly [Docket No. 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"). SEC / JURISDICTION. at 382. The defendants argue that as a subsequent creditor, Prospect is required to plead actual fraud, and the amended complaint fails to do so. 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." Investment Philosophy; Target Investments; Portfolio endstream endobj startxref Id. See Silvercreek Mgmt., Inc. v. Citigroup, Inc., 346 F. Supp. In early 2018, Wellspring Capital notified SportCo's secured lenders that SportCo would default on a $4.7 million interest payment due in the second quarter of 2018. N.D.N.Y. The firm's objective is to bring partnership, experience and value creation to each investment. The company will explode Rich!" Designed By, https://www.wellspringcapital.co.uk/disclaimer. Find More Contacts for Wellspring Capital Management, Edit Lists Featuring This Company Section, European Regulation Ushers In Global Future For Fundraising, Wellspring Capital Management Acquires Caring Brands International, Private Equity Firms with Investments in United States, Greater New York Area Investors with Funds Raised in 2017, Private Equity Firms with Investments in Asia. Wellspring Capital, Mr. Carles, and Mr. Johnson were not insiders of AcuSport, and the amended complaint does not allege that they had any special knowledge or information about AcuSport that was not available to the public. [Amended Complaint, 32]. Va. June 8, 2011) (acknowledging that Maryland law is not clear regarding whether a fraudulent conveyance action sounds in tort, but concluding that "given that the gravamen of the fraudulent conveyance claim is the wrongfulness of the conveyance and the injury to the creditor, rather than balancing equities or fairness, it is appropriate to conclude that fraudulent conveyance claims sound in tort. .JFY+h!Hkw;s"$ 4AuF~!D =j]4z*g7i>B 1NEDm @@,!ptz"Br}-rh>wI }9.&>5/n2n/OefX 2005)). 915 0 obj <> endobj W.D. January 12, 2022 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. REGISTRATION STATUS . Wellspring, 2021 WL 4823513, at *10. Password (at least 8 characters required). 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). These facts, as recited in the complaint, are taken as true for purposes of the motions to dismiss. The plaintiff, Ronald J. Friedman, the trustee for the SportCo Creditors' Liquidation Trust, filed an omnibus response to the motions to dismiss [Docket No. Law360 provides the intelligence you need to remain an expert and beat the competition. 962 0 obj <>stream As part of the debt management process, it said it would close 375 of its 1,300 stores. 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. It is Bavaria's largest city and the third largest city in Germany (after Berlin and Hamburg). "[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.'" 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. . Practices: Federal Rule of Bankruptcy Procedure 7012(b). Law360 takes your privacy seriously. Defendant Wellspring Capital Management LLC is a Delaware limited liability company with its principal place of business at 390 Park Avenue, New York, New York 10022. 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. It is not unusual for an entity facing distress to engage with their stakeholders and to negotiate any number of transaction alternatives and terms. Our tight-knit culture enables transparent oversight and a streamlined decision-making process. Ellett Brothers LLC ("Ellett"), a South Carolina limited liability company, was a sporting goods distributor. While property interests are defined by state law in the absence of a compelling federal interest, the Court would look to the Bankruptcy Code in making a determination of whether property is property of the estate under section 541. Use tab to navigate through the menu items. 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. 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 . You have to know whats happening with clients, competitors, practice areas, and industries. Id. 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. "); Terry v. Walker, 2006 WL 736861, at *5 (W.D. *aUQBT&1#J$8Q)=WE9M'v1s_)GG+.kbN;yELi.UD1N{f'u$y`'GCJfS;4yXwbW${%^tcxG2}+/P@U `a$b6? In 2010, Bain Capital acquired the company for US$1.8 billion. Musk Made a Mess at Twitter. 24. 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. Corporate Advocacy Program. 3d 473, 506 (S.D.N.Y. 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. Id. The United States Court of Appeals for the Third Circuit wasted no time getting the new year off to a roaring start through its ruling in In re LTL Mgmt., LLC, Case No. 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. Most of them do not even contain any concrete information about the proposed AcuSport purchase or the likelihood of the Borrowers' default. R. Civ. 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. [Amended Complaint, 57]. 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). New York law and South Carolina law differed as to whether such a transfer was permitted. Otherwise you cannot get paid." Wellspring Capital Management has acquired 38 organizations. The plaintiff responds that the statements relate to presently existing facts and that opinions are actionable in a negligence context. 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. 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. They are not actionable. Wellsprings objective is to bring partnership, experience and value creation to each investment. hXO8WtVH,~W"I/ {;N7'0HAA0%`Ih5L!p! Reputation Management. 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. Whether youre building capital for your family, retirement or other life goals, we can help you with our high conviction and disciplined investment style. 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. The issue in Merritt Dredging was the sale of a barge and the priority of parties' interests in the proceeds of the sale. On May 3, 2018, SportCo agreed to acquire AcuSport's assets in bankruptcy for $7 million. 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). Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Company specializes in private companies buyouts, acquisitions of divisions and subsidiaries of public companies, and going . The Firm also has a long history of collaboration with entrepreneurs and closely held businesses to achieve outsized growth, with a large percentage of our portfolio companies being transitioned from founder ownership. The February 20, 2018 stated, "You're [sic] economics are going down and the risk of chapter is going up. Ashmore for Wilson v. Dodds, 262 F. Supp. @S1 $82N+ZJ | At the conclusion of the hearing, the Court took the motions under advisement. 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. GitHub export from English Wikipedia. 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. 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. 90], Alexander E. Carles [Docket No. 91], F. Hewitt Grant [Docket No. 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. 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. 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. To summarize New York law, then, it appears that opinions can be actionable, but are not always actionable. And the best part of all, documents in their CrowdSourced Library are FREE. (Compl. The defendants' motions to dismiss are granted. [Amended Complaint, 49]. It featured lower-priced clothing and was Gymboree's direct competitor for The Children's Place and Old Navy.. Innovative Custom Brands, Inc. v. Minor, 2016 WL 308805, at *2 (S.D.N.Y. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. 2022 Wellspring Capital Management Group LLC |. Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. 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. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through . About Wellspring Capital Management Wellspring Capital Management, founded in 1995, is a leading middle-market private equity firm that manages more than $4.4 billion of private equity capital. There are no allegations in the amended complaint that the debtors' liabilities exceeded their assets at the time of the transfers. 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. hb```e``jb`a`\ @1V h`2q:lp10qfaqB,X3s10iH(^t1 with actual intent . D. Del. Please Update this case to get latest docket information. Its success is based on a portfolio that, since inception in 2014, has delivered double digit returns on an annualised basis. 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. The 2011 Wellspring Capital Partners V LP was fully invested at $1.2 billion and has generated positive returns for its investors to-date. The defendants' remaining arguments need not be addressed. Id. All rights reserved. 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. 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. 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. 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. 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. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . [Amended Complaint, 93]. Div. %%EOF %PDF-1.5 % David Westin speaks with top names in finance about the week's biggest issues on Wall Street. 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. Id. 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. 20-50554, 2021 WL 4823513 (Bankr. CDI's smaller Atlanta peer said to weigh sale in '18. UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA. The assignment was executed in New York, but the personal property was located in South Carolina at the time the assignment was executed. [Amended Complaint, 51]. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. For the reasons set forth below, under the law of either state, the plaintiff's first and second causes of action must be dismissed. WELLSPRING CAPITAL MANAGEMENT ( CRD # 135455/SEC#:801-64341 ) WELLSPRING CAPITAL MANAGEMENT, WELLSPRING CAPITAL MANAGEMENT, INC. View latest Form ADV filed Part 2 Brochures. 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. It is not intended as and should not be construed as financial, investment, tax, legal, regulatory, or other advice. The amended complaint further states that from October 2012 to October 2013, "Ellett achieved record sales and earned revenues of approximately $1.2 billion." Note: This site is for informational purposes only. 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. Less than a year later, the liquidation trustee sued Wellspring and related parties, alleging breaches of fiduciary duty of care and loyalty. Attorney advertising. Despite that agreement in principle, it was alleged in relevant part that: Unable to agree on the release and indemnification issue, SportCos out-of-court restructuring failed, and SportCo defaulted on its funded debt shortly thereafter. In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. Will Others Follow? at 385. 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. at 358. 22-2003, 2023 WL 1098189 (3d Cir. The basic complaint is that Wellspring directors put self-interests above those of the company and its creditors. This Supreme Court Case Could Redefine Crime, YellowstoneBackers Wanted to Cash OutThen the Streaming Bubble Burst, How Countries Leading on Early Years of Child Care Get It Right, Female Execs Are Exhausted, Frustrated and Heading for the Exits, No Major Offer Expected on Childcare in UK Budget, Biden Gives Medal of Honor to Trailblazing Special Forces Member, Climate Change Is Launching a MutantSeed Space Race, UK Braces for Rare Weather Event That Risks Late-Winter Freeze, This Former Factory Is Now New Taipeis Edgiest Project, What Do You Want to See in a Covid Memorial? Consumers want to see how a business took care of business. SaaS, Android, Cloud Computing, Medical Device), Where the organization is headquartered (e.g. Alexander Carles' and Bradley Johnson's arguments are limited to the negligent misrepresentation cause of action, the only cause of action asserted against them. 2008) (citing Southmark Corp. v. Crescent Heights VI, Inc. (In re Southmark Corp.), 95 F.3d 53, 53, n.7 (5th Cir. The alleged statements simply do not constitute actionable statements that can form the basis of a negligent misrepresentation claim. We are motivated and incentivised to succeed. The Court now issues this order, granting the motions to dismiss for the reasons set forth below. 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 Wellspring Capital Management is a leading middle-market private equity firm headquartered in New York. Another email stated, in part: "Gotta get your interest? On December 31, 2018, the Borrowers defaulted on their obligations under the Loan Agreements and the Amendments. Wellspring Capital Management, founded in 1995, is a middle-market private equity firm that has approximately $2 billion of private equity capital under management. 8h`6$67Xn@,`& At all times relevant to these claims, Wellspring Capital controlled (a) Wellspring Capital Partners 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. [Amended Complaint, 37, 40]. 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. E-mail: sandra@wellspring-cap.com; Videos. Wellspring brought its assets under management to more than $4.4 billion as of January 2018. 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. Id. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. 'Ov}b0. 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. Phone: 650 729-8626. PLEASE SEE THIS LINK FOR FULL DISCLAIMER: This site is for informational purposes only. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Sec'y of State for Def. The plaintiff's first and second causes of action are based on 11 U.S.C. While New York law and South Carolina law have slightly different tests for avoiding constructive fraudulent conveyances, there exists a common thread which is not satisfied hereinsolvency at the time of the transfer. 19-80071-DD (Bankr. The December 26, 2017 email stated, "So you will waive [your interest payments]. James brought a civil suit against Trump in September, alleging the Trump organization had fraudulently inflated the value of . The firm's objective is to bring partnership, experience and value creation to each investment. The court considered whether the plaintiff had proved the tort of innocent misrepresentation. Finally, in West Side Fed. Fund VI brings the firm's assets under management to more than $4.4 billion. D.S.C. It identifies undervalued companies whose share price does not properly reflect the true value of the business. You can help Wikipedia by expanding it. Bloomberg View columnist Barry Ritholtz looks at the people and ideas that shape markets, investing and business. 93], and Bradley Johnson [Docket No.