In this process, SportCo initially exchanged a term sheet with certain of its lenders in early November 2018 and allegedly reached an agreement in principle in late December 2018. Business Restructuring, 3d 473, 506 (S.D.N.Y. The plaintiff/litigation trust also asserted claims directly against Wellspring Capital under an aiding and abetting theoryi.e., asserting that Wellspring Capital itself aided and abetted the SportCo Boards alleged fiduciary duty breaches. 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 elements of a negligent misrepresentation claim under New York law are: The plaintiff also cites King County, Washington v. IKB Deutsche Industriebank, 863 F. Supp. Tenn. 1991); 11 U.S.C. Active, Closed, This describes the type of investor this organization is (e.g. The case status is Pending - Other Pending. Prior results do not guarantee a similar outcome. [Amended Complaint, 51]. Therefore, the plaintiff argues that he is only required to establish constructive fraud. 1999)). Law360 provides the intelligence you need to remain an expert and beat the competition. SaaS, Android, Cloud Computing, Medical Device), Where the organization is headquartered (e.g. 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. N.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. 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. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. . "[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.'" ), Create custom alerts for specific article and case topics and, I took a free trial but didn't get a verification email. The plaintiff's first and second causes of action are based on 11 U.S.C. The portfolio manager is also a co-investor in the strategy. Wellspring Capital manages an investment portfolio of between 10 and 15 international stocks. 2005)). The courts analysis of the duty of loyalty claim can be fairly characterized as limited, consisting of four short paragraphs that largely restate or simply quote the complaint. 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. v. Holmes (In re Holmes), 610 B.R. [Amended Complaint, 49]. 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 a leading middle-market private equity firm headquartered in New York. 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. Practices: Sav. On March 7, 2013, the Borrowers entered into a First Amendment to the Loan Agreements (the "First Amendment"), pursuant to which Prospect loaned the Borrowers an additional $60 million. All rights reserved. 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. Corporate Advocacy Program. 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. Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through . Public Records Policy. 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. Federal Rule of Bankruptcy Procedure 7012(b) provides that Federal Rule of Civil Procedure 12(b) applies in adversary proceedings. The defendants' motions to dismiss are granted. The firm's objective is to bring partnership, experience and value creation to each investment. Regardless, market participantsand equity sponsors in particularshould view Wellspring as an important reminder as to how both process and substance matter in restructuring negotiations. Fund VI brings the firm's assets under management to more . By teaming up with strong management, Wellspring is able to unlock underlying value and By continuing to use this website, you agree to UniCourts General Disclaimer, Terms of Service, The firm's objective is to bring partnership, experience and value creation to each investment. 2022 Wellspring Capital Management Group LLC |. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). UniCourt uses cookies to improve your online experience, for more information please see our Privacy Policy. Wellspring Capital Management is a leading private equity firm headquartered in New York. 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 Id. 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. Founded in 1995, Wellspring Capital Management is a private equity firm headquartered in New York, New York. Hiding negative complaints is only a Band-Aid. 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. Sav. The defendants' motions rely on Federal Rule of Civil Procedure 12(b)(6). This is the best way to manage and repair your business reputation. Federal Rule of Bankruptcy Procedure 7012(b). 1001 to 5000 Employees. Please see our Privacy Policy. Id. "); Terry v. Walker, 2006 WL 736861, at *5 (W.D. In the legal profession, information is the key to success. After the defendants filed replies, the Court held a hearing on June 18, 2020. 91], Andrew Kupchik [Docket No. 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 . An actual fraudulent conveyance is any "conveyance made . It featured lower-priced clothing and was Gymboree's direct competitor for The Children's Place and Old Navy.. Another email stated, in part: "Gotta get your interest? 2021 by wellspring capital Management. 'Ov}b0. These tools have been used since the firm's inception in 1995 to generate consistent business improvement in its portfolios. 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 court addressed the dissent's finding, that the defendant's determination of the number of parking spaces was a matter of judgment or opinion and was therefore unactionable. 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. It identifies undervalued companies whose share price does not properly reflect the true value of the business. ~p03ngx1Ai63*oP 4TP3Nt'xn0R8tJ'a7D2P6ILky6L;0;0SUNrtd t ";Qb[K-Ii 1g%\i) IZ3uAH0J40v0xt0v40Xt8 y CJ3t@y`$21kL to hinder, delay, or defraud either present or future creditors." 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 defendants' remaining arguments need not be addressed. at 382. Mr. Friedman filed an amended complaint the same day. Contact:KekstMark Semer or Peter Hill212.521.4800, Cision Distribution 888-776-0942 1996)). From reading the Financial Times at school to managing his first portfolio at just 18, he has built Wellspring Capital into a nationwide wealth management boutique. In Fall 2018, SportCo Holdings, Inc. (SportCo) was facing severe financial distress. Fed. New York law and South Carolina law differed as to whether such a transfer was permitted. 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 Capital Management is a middle-market private equity financing firm. 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. 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. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. The parties disagree on what law should applyfederal or state, and further if state law applies, New York or South Carolina. 987, 999-1000 (Bankr. 19.)1. For the reasons set forth below, under the law of either state, the plaintiff's first and second causes of action must be dismissed. 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. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. The alleged statements simply do not constitute actionable statements that can form the basis of a negligent misrepresentation claim. 544 and 550 and S.C. Code 27-23-10; (2) avoidance and recovery of fraudulent transfers by SportCo against the Transferee Defendants pursuant to 11 U.S.C. 20-50554, 2021 WL 4823513 (Bankr. Wellspring targets investments with the following characteristics: Id. 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." They are simply not statements of preexisting fact that were false when made. Angel, Fund of Funds, Venture Capital), General contact email for the organization. We are motivated and incentivised to succeed. 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. 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. Wellspring Capital Management is an American private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. 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. 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 at 358. at 321. When typing in this field, a list of search results will appear and be automatically updated as you type. 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. 112]. The defendants asserted common arguments in support of dismissal, but all arguments made in support of dismissal were not asserted by each defendant. 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. The issue in Merritt Dredging was the sale of a barge and the priority of parties' interests in the proceeds of the sale. Todd Boehly filed a joinder to the Wellspring Defendants' motion to dismiss. Id. In Sheldon, the defendant, a New York citizen, assigned some personal property to Mr. Dickinson. The firm's objective is to bring partnership, experience and value creation to each investment. However, whether a fraudulent conveyance action is characterized as a tort action is unsettled. Consumers want to see how a business took care of business. By teaming up with strong management, Wellspring seeks to unlock underlying value and pursue new growth opportunities through strategic initiatives, operating improvements and add-on acquisitions. It had previously received notification, in early 2018, that the Borrowers would default on their obligation under the Loan Agreements and the Amendments in the second quarter of 2018. 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. The firm prefers to invest through means of carveout, buyouts, add-on, public to private and growth capital. King County, 863 F. Supp.2d at 318. As part of the debt management process, it said it would close 375 of its 1,300 stores. As a result, the defendants argue, it would be unjust for Prospect to now be able to avoid the distributions. Id. The plaintiff's third cause of action, for negligent misrepresentation against defendants Wellspring Capital, Mr. Carles, and Mr. Johnson, must also be dismissed. Bloomberg View columnist Barry Ritholtz looks at the people and ideas that shape markets, investing and business. Home; About Us; Investment Approach. In King County, the court considered suits by investors seeking to recover losses incurred after the collapse of a structured investment vehicle. with actual intent . These all relate to a proposed business transactionthe purchase by Ellett of AcuSport. [Amended Complaint, 57]. 89], Charles E. Walker, Jr. [Docket No. Wellspring Capital Management is a leading private equity firm headquartered in New York. Founded in 1995, Wellspring invests anywhere . At the conclusion of the hearing, the Court took the motions under advisement. at 385. Why is this public record being published online? hXO8WtVH,~W"I/ {;N7'0HAA0%`Ih5L!p! . Since its founding in 1995, Wellspring has raised over $4 billion of initial capital commitments through six private equity funds. Haynsworth Sinkler Boyd, P.A. 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. 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). The court stated: See Credit Alliance Corp. v. Arthur Anderson & Co., 65 N.Y.2d 536 (NY App. . 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. These emails can hardly be considered negligent misrepresentations. Wellsprings facts, as alleged, are fairly straightforward. Musk Made a Mess at Twitter. 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. hb```e``jb`a`\ @1V h`2q:lp10qfaqB,X3s10iH(^t1 [4] Wellspring completed fundraising on its sixth fund in 2018 with $1.45 billion of investor commitments as a successor to its $1.2 billion 2011 Fund V.[3], Wellspring focuses on the packaging, healthcare, niche manufacturing and distribution sectors.[5][6]. 2021 by wellspring capital Management. 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. In re Merritt Dredging Co., Inc., 839 F.2d 203, 205 (4th Cir. The court considered whether the plaintiff had proved the tort of innocent misrepresentation. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. We have interesting videos for you to watch on my site. 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. 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. Law360 takes your privacy seriously. Certain state securities regulatory authorities have similar exemptions based on . Discretionary portfolio management with a difference, Make your investment with Wellspring Capital Management. 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. 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. e""8*&B The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. Wellspring Capital Management Fund Manager Website www.wellspringcapital.com Fund Category Private Equity Close Date 0000-00-00 Fund Family Wellspring Capital Partners Native Currency USD Fund Manager's Location 605 Third Avenue 44th Floor New York, NY 10158 United States +1 (212) 000-0000 Fund Domiciles Canada Innovative Custom Brands, Inc. v. Minor, 2016 WL 308805, at *2 (S.D.N.Y. However, the Court has the discretion to sua sponte dismiss a complaint pursuant to Fed. Probitas Partners acted as exclusive placement agent and Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal counsel with respect to formation of Fund VI. 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. Div. Casetext, Inc. and Casetext are not a law firm and do not provide legal advice. 0 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. Munich, German Mnchen, city, capital of Bavaria Land (state), southern Germany. Wellspring Capital Management prevailed in the sponsor-driven process for Center for Diagnostic Imaging, the country's largest private . D. Del. 544 and 550 and S.C. Code 27-23-10; and (3) negligent misrepresentations against Wellspring Capital, Mr. Carles, and Mr. Johnson. 609, 614 (Bankr. Sounds like a tidy deal at year end [2017] made a lot of sense." (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. January 12, 2022 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. R. Civ. Prospect is a sophisticated party and, to the extent that it wanted to confirm the predictions made by Mr. Carles and Mr. Johnson were in fact accurate, it could have exercised due diligence. & Loan Ass'n of New York City, the plaintiff loaned funds to the defendant, secured by a mortgage on a parking garage. 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"). 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. View contacts for Wellspring Capital Management to access new leads and connect with decision-makers. Wellspring Capital Management is a leading private equity firm headquartered in New York. Since its founding in 1995, Wellspring has raised over $4.0 billion of initial capital commitments through . Wellspring Capital is a boutique discretionary management service with a portfolio positioned for high performance. New York law prohibits both actual and constructive fraudulent conveyances. "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."'" 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. The assignment was executed in New York, but the personal property was located in South Carolina at the time the assignment was executed. For example, the October 27, 2017 email stated, "The only way to optimize is to merge with Acusport." 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. The Wellspring ruling was not appealed, nor has any trial occurred on this matter. Instead, they may form the basis for a negligent misrepresentation claim if the party making the misrepresentation possesses some special expertise (by way of his job title or position, for example), or has some special knowledge about the particular fact that is allegedly misrepresented. Our tight-knit culture enables transparent oversight and a streamlined decision-making process. California Weighs $360,000 in Reparations to Eligible Black Residents. at 382. 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. The Wellspring court dismissed the litigation trusts claim for breach of the fiduciary duty of care, holding that it was not adequately pled. Defendant Bernard Ziomek is in default in this matter. Over the past 20 years, Wellspring has invested in over 35 platform investments across . Cancellation and Refund Policy, Privacy Policy, and (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 . Will Others Follow? Wellspring Capital Management is a middle-market private equity firm that has approximately $2 billion of private equity. After all, corporate decisionmakers are often tasked with choosing a path where outcomes are at best uncertain. The firm's objective is to . The Court also notes that, setting the other factors aside, given the extreme nature of the urgent tone of these emails, and the highly sophisticated status of Prospect, Prospect satisfying the justifiable reliance element of a negligent misrepresentation claim is questionable, at best. The Court further notes that here, section 548 is not available to the plaintiff due to the timing of the transfers and the bankruptcy filings. The principal and lead portfolio manager at Wellspring Capital is Avrohom Neumann. Law360 may contact you in your professional capacity with information about our other products, services and events that we believe may be of interest.Youll be able to update your communication preferences via the unsubscribe link provided within our communications.We take your privacy seriously. This approach has historically delivered returns well above inflation. 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. Many of the facts underlying the Wellspring decision are neither unique nor unusual. 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. Please Update this case to get latest docket information. 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. We look forward to hearing from you. The firm, which is based in New York City, was founded in 1995 by Martin Davis and Greg Feldman. 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. Asia Pacific; EMEA; Latin America; UK Solicitors; UK Bar; United States Less than a year later, the liquidation trustee sued Wellspring and related parties, alleging breaches of fiduciary duty of care and loyalty. On May 3, 2018, SportCo agreed to acquire AcuSport's assets in bankruptcy for $7 million. Its success is based on a portfolio that, since inception in 2014, has delivered double digit returns on an annualised basis. 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. 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. 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. The Court addresses in this order only those arguments that clearly mandate dismissal. 962 0 obj <>stream Wellspring, founded in 1995, has raised more than $4 billion of capital commitments through six private equity funds, according to its website. Wellspring Capital Management is a leading private equity firm headquartered in New York. Sec'y of State for Def. 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).

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