USA v. Walnut Investment Partners, L;P.

Filing 1

Consent ORDER of Receivership by Susan J. Dlott, United States District Court Judge, U.S.D.C. Ohio on 12/23/2014. (Attachments: # 1 Complaint For Receivership, # 2 Civil Cover Sheet) (dbera, )

Case: 1:14-cv-00965-SJD Doc #: 3 Filed: 12/23/14 Page: 1 of 11 PAGEID #: 9

IN THE UNITED STATES DISTRICT COURT
FOR SOUTHERN DISTRICT OF OHIO
CINCINNATI DIVISION

UNITED STAtES OF AMERICA,
on behalf of its agency, the United
States Small Btlsiness Administration
Plaintiff,

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l'S.

WALNUT INVESTMENT PARTNERS, L.P.
Defendant.

Civ.ActionNo. 1:14-cv-965

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CONSENT ORDER OF RECEIVERSHIP

IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
1.

Pursuant to the provisions of 15 U.S.C. §687c, this Court takes exclusive

jurisdiction of Walnut Investment partners, L.P. ("WIP") and all of its assets and property, of
whatever kind •nd wherever located, and the United States Small Business Administration
(''SBA") is her~by appointed Receiver ("the Receiver") of WIP to serve without bond until
further order of: this Court. The Receiver is appointed for the purpose of marshalling and
liquidating in an orderly manner all of WIP's assets and satisfying the claims of creditors
thereof in the order of priority as determined by this Court.
2.

The Receiver shall have all powers, authorities, rights and privileges

heretofore posSessed by the general partner, managers, officers, directors, investment
advisors and other agents of WIP under applicable state and federal law, by the Certificate of
Limited Partnership and Agreement of Limited Partnership of said limited partnership, in

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addition to all p(>wers and authority of a receiver at equity, and all powers and authority
conferred upon the Receiver by the provisions of 15 U.S.C. § 687c and
28 U.S.C. § 754!. The managers, officers, directors, investment advisors and agents ofWIP
are hereby dismiissed and the powers of the general partner are hereby suspended, with the
exception that (J) James M. Gould shall continue to represent WIP on the Board of Directors
of the following WIP portfolio concerns: (i) The O'Gara Group, Inc.; (ii) Marian Heath
Greeting Cards,, LLC; and (iii) Seed Media Group, LLC on the terms set by, and at the sole
discretion of, the Receiver and (b) that Frederic H. Mayerson shall continue to represent WIP
on the Board ofDirectors of the following WIP portfolio concerns: (i) PECO Logistics, LLC;
and (ii) Marian Jieath Greeting Cards, LLC on the terms set by, and at the sole discretion of,
the Receiver. Unless otherwise set forth herein, the managers, officers, directors, investment
advisors and agents of WlP shall have no authority with respect to WIP's operations or
assets, except to the extent as may hereafter be expressly granted by the Receiver. The
Receiver shall qssume and control the operation of WIP and shall pursue and preserve all of
its claims.
3.

the past and/or present general partners, managers, officers, directors,

investment advisors, agents, trustees, attorneys, accountants, and employees of WIP, as well
as all those acting in their place, are hereby ordered and directed to tum over to the Receiver
forthwith all bopks, records, documents, accounts and an other instruments and papers of and
relating to WIP:and its assets and all other assets and property of the corporation, whether
real or personal~ The General Partner and/or other agent of WIP, shall furnish a written
statement within ten (10) days after the entry of this Order, listing the identity, location and
estimated value of all assets of WIP as well as the names, addresses and amounts of claims of

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all known creditors ofWIP. Within thirty (30) days following the entry of this Order, such
person shall als¢1 furnish a written report describing all assets. All persons having control,
custody or poss~ssion of any assets or property of WIP are hereby directed to tum such assets
and property over to the Receiver.

The Receiver shall promptly give notice of its appointment to all known

4.
partners,

officer~,

directors, agents, employees, shareholders, creditors and debtors of WIP,

as the Receiver deems necessary or advisable to effectuate the operation of the receivership.
All persons and !entities owing any obligation or debt to WIP, until further ordered by this
Court, pay all such obligations in accordance with the terms thereof to the Receiver and its
receipt for such payments shall have the same force and effect as if WIP had received such
payments.
5.

The Receiver is hereby authorized to open such Receiver's accounts at

banking or othe~ financial institutions to extend credit on behalf of WIP, to utilize SBA
personnel, and t¢> employ such other personnel as it may deem necessary to effectuate the
operation ofthe !receivership including, but not limited to, attorneys, accountants, and
appraisers, and is further authorized to expend receivership funds to compensate such
personnel in such amounts and upon such terms as the Receiver shall deem reasonable in
light of the usuai fees and billing practices and procedures of such personnel. The Receiver

is not required to obtain Court approval prior to the disbursement of receivership funds for
payments to per$onnel employed by the Receiver or for expenses that the Receiver deems
advantageous to!the orderly administration and operation of the receivership. In addition, the
Receiver is auth~rized to reimburse the SBA for travel expenses incurred by SBA personnel
in the establishment and administration of the receivership. The Receiver may, without

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further order ofthis Court, transfer, compromise, or otherwise dispose of any asset (including
without limitati<m any claim), other than real estate.
6.

WIP's past and/or present partners, officers, directors, agents, accountants,

managers, shareholders, employees, debtors and creditors ofWIP and other appropriate
persons (includi~g without limitation, the defendant's portfolio of small business concerns
and financial in$titutions doing business with defendant and/or defendant's portfolio of small
business concetiJs) shall, upon reasonable notice, answer under oath to the Receiver aU
questions which the Receiver may put to them in compliance with the Federal Rules of Civil
Procedure, and pursuant thereto shall produce any documents as required by the Receiver
regarding the business of said corporation, or any other matter relevant to the operation or
administration ~f the receivership or the collection of funds due to WIP. In the event that the
Receiver deems! it necessary to require the appearance of the aforementioned persons, the
production of documents, information, or any other discovery concerning the assets, property
or business operations of WIP, or any other matter relevant to the operation or administration
ofthe Receiver$hip or the collection of funds due to WIP, the Receiver shall make its
discovery reque!St(s) in compliance with the notice, subpoena and other Federal Rules of
Civil Procedure\.
7.

The parties or prospective parties to any and all civil legal proceedings

wherever located, including, but not limited to arbitration proceedings, bankruptcy or
foreclosure acti~ns, default proceedings, or any other proceedings involving (i) WIP, (ii) any
assets ofWIP, (Hi) the Receiver for WIP or (iv) WIP's present or past officers, directors,
managers, or general partners (including the managers or members of such general partner) to
the extent said qivillegal proceedings involve any action taken by them white acting in their

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official capacity !with WIP, are enjoined from taking any action, including discovery,
commencing or continuing any legal proceeding of any nature without further order of this
Court. Except thJlt PECO Logistics, LLC, v. Walnut Investment Partners, LP., Walnut Private
Equity Fund, L.~., MK Capital SBIC, L.P., MK Capital, L.P., The Productivity Fund IV, L.P.,
The Productivity Fund IV Advisors Fund, L.P., Greenrange Partners 12, LLC, Greenrange
Partners, LLC, ahd James Ozanne, Case No. 9978-CVP currently pending in the Court of
Chancery of the State of Delaware, shall be excluded from such injunction and the action shall

be allowed to proceed in the Court of Chancery of the State of Delaware.
8.

All civil legal proceedings wherever located, including arbitration proceedings,

foreclosure actiwties, bankruptcy actions, or default proceedings, but excluding the instant
proceeding, involving (i) WIP, (ii) any of assets of WIP, (iii) the Receiver for WIP or (iv)
WIP's present on past officers, directors, managers, or general partners (including the managers
or members of such general partner) to the extent said civil legal proceedings involve any
action taken in tl!eir official capacity for WIP are stayed in their entirety, and all courts having
any jurisdiction thereof are enjoined from taking or permitting any action in such proceedings
until further Order of this Court. Except that PECO Logistics, LLC, v. Walnut Investment
Partners, L.P., Walnut Private Equity Fund, L.P., MK Capital SBIC, L.P., MK Capital, L.P.,
The Productivity Fund IV, L.P., The Productivity Fund IV Advisors Fund, L.P., Greenrange
Partners 12, LLG, Greenrange Partners, LLC, and James Ozanne, Case No. 9978-CVP
currently pending in the Court of Chancery ofthe State of Delaware, shall be excluded from
such stay and tM action shall be allowed to proceed in the Court of Chancery of the State of
Delaware.

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9.

Further, as to a cause of action accrued or accruing in favor of WIP against a

third person or })larty, any applicable statute of limitation is tolled to the extent allowed by
applicable law during the period in which this injunction against commencement of legal
proceedings is in effect as to that cause of action.
10.

WIP and its past and/or present managers, general partner or limited partners,

officers, directors, agents, investment advisors, employees and other persons acting in
concert or parti¢ipating therewith be, and they hereby are, enjoined from either directly or
indirectly takin' any actions or causing any such action to be taken which would dissipate
the assets and/or property of WIP to the detriment of the Receiver appointed in this cause,
including but nGt limited to destruction of corporate records, or which would violate the
Small Business:Investment Act of 1958, as amended, 15 U.S.C. 661 et. seq., or the
regulations protlnulgated thereunder ("Regulations~~), 13 C.F.R. Part 107.
11.

The Receiver is authorized to borrow on behalfofWlP, from the SBA, up to

$2,000,000, and is authorized to cause WIP to issue Receiver's Certificates of Indebtedness in
the principal amounts of the sums borrowed, which certificates will bear interest at or about 10
percent per ann\l.m and will have a maturity date no later than 18 months after the date of issue.
Said Receiver1S Certificates of Indebtedness shall have priority over all other debts and
obligations ofWIP, excluding administrative expenses of the Receivership, whether presently
existing or hereinafter incurred, including without limitation any claims of partners of WIP.
12.

this Court determines and adjudicates that WIP has violated the Small Business

Investment Act; 15 U.S.C. 661 et. seq, and the Regulations promulgated thereunder at 13
C.F.R. § 107.1 et. seq, as alleged in the Complaint filed in this matter.

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13.

After completing its activities in accordance with this Order, the Receiver may

recommend that WIP s license as an SBIC be revoked and that control ofthe limited
partnership be retumed to WIP's general partner and/or its designee or successor in interest

SO ORDERED 'this \ ...t

day of

b~t:.R. , 20.!f.

THE HONORABLE
UNITED STATES DISTRICT COURT JUDGE
SEEN AND AGREED BY WALNUT INVESTMENT PARTNERS, L.P. AND THE U.S.
SMALL BUSIN!ESS ADMINISTRATION, THROUGH THEIR DULY AUTHORIZED
REPRESENTATIVES:
WALNUT INVJBSTMENT PARTNERS, L.P.
By: Walnut Invctstment Holdings CO, LLC

Its General Partner

By: Frederic H. Mayerson, a Managing Membe

By: Daniel Staton, a Managing Member

By: Joseph

a Managing member

U.S. SMALL BUSINESS ADMINISTRATION

By: ______~-------­
Thomas 0.
Director
Office of SBIIC Liquidation

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13.

After eompleting its activities in accordance with this Order, the Receiver may

recommend that i\VIP s license as an SBIC be revoked and that control of the limited
partnership be reJ:umed to WIP's general pru1ner and/or its designee or successor in interest.

THE HONORABLE
UNITED STATES DISTRICT COURT JUDGE
SEEN AND AGREED BY WALNUT INVESTMENT PARTNERS, L.P. AND THE U.S.
SMALL BUSINIESS ADMINISTRATION, THROUGH THEIR DULY AUTHORIZED
REPRESENTATIVES:
WALNUT INV~STMENT PARTNERS, L.P.
By: Walnut Inv~tment Holdings CO, LLC
Its General Pa.rtn!er

By!~-Frecteric H Mayerson, a Managing Membe~

--·--····----+---------·
By: James Gould, a Managing Member

/7}/?L

~~·----·-------

By: Daniel Staton, a Managing Member

By: Joseph Ganltz, a Managing Member
U.S. SMALL BUSINESS ADMINISTRATION

By: _ _ ___.,__ _
Thomas G. Morris, Director
Office of Sl$C Liquidation

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13.

f\fter completing its activities in accordance with this Order, the Receiver may

recommend that WIP s license as an SBIC be revoked and that control of the limited
partnership be Itturned to WIP' s general partner and/or its designee or successor in interest.

SO ORDEREI) this _ _ day of _ _ _ _ _, 20_.

THE HONOAABLE
UNITED STATES DISTRICT COURT JUDGE
SEEN AND AGREED BY WALNUT INVESTMENT PARTNERS, L.P. AND THE U.S.
SMALL BUSINESS ADMINISTRATION, THROUGH THEIR DULY AUTHORIZED
REPRESENTATIVES:
WALNUT INVESTMENT PARTNERS, L.P.

By: Walnut Investment Holdings CO, LLC
Its General Pm1ner

By: Frederic I:t Mayerson, a Managing Member

By: James M. :Gould, a Managing Member

By: Daniel Staton, a Managing Member

By Joseph O$ntz, a Managing mem er
\

U.S. ~L BUSINESS ADMINISTRATION

By: - - - r - - - - - Thomas Ol MotTis, Director
Office of SBIC Liquidation

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After completing its activities in accordance with this Order, the Receiver may

13.

recommend thati WIP s license as an SBIC be revoked and that control of the limited
partnership be r¢tumed to WIP's general partner and/or its designee or successor in interest.

SO ORDERED this _ _ day of _ _ _ _ _ , 20_.

THE HONORABLE
UNITED STAltES DISTRICT COURT JUDGE
SEEN AND A()REED BY WALNUT INVESTMENT PARTNERS, L.P. AND THE U.S.
SMALL BUSI1'fESS ADMINISTRATION, THROUGH THEIR DULY AUTHORIZED
REPRESENTATIVES:
WALNUT INVf:STMENT PARTNERS, L.P.
By: Walnut Investment Holdings CO, LLC
Its General Pa:rttJer

By: James

a Managing Member

By: Frederic Mayerson, a Managing Member

By: Daniel

-·~

By:

S~ton,

a Managing Member

Joseph Gantz, a managing member

U.S. SMALL BUSINESS ADMINISTRATION

By:~
Thomas G. Morri • irector
Office of Sl:liC Liquidation

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13.

Mer completing its activities in accordance with this Order, the Receiver may

reconnnend that WIP s license as an SBIC be revoked and that control of the limited
partnership be returned to WIP's general partner and/or its designee or successor in interest.

SO ORDERED

this~ day of J)t.(L,

,20/1

ICT COURT JUDGE
SEEN AND AGREED BY WALNUT INVESTMENT PARTNERS, L.P. AND 'fHE U.S.
SMALL BUSINESS ADMINISTRATION, THROUGH THEIR DULY AUTHORIZED
REPRESENTAl!'IVES:

By: James Goulo. a Managing Member

By: Daniel Stat0n, a Managing Member

By: Joseph Gantz, a Managing Member

U.S. SMALL BUSINESS ADMINISTRATION

By:
Thomas G. Morris, Director
Office of SBIIC Liquidation

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