United States of America v. Walnut Private Equity Fund

Filing 2

Copy of ORDER USDC-Southern District of Ohio (Cincinnati Division) 1:14cv865) appointing United States Small Business Administration as receiver of Walnut Private Equity Fund (WPEF) (MKR)

.
,.

Case: 1:14-dv-00865-SJD Doc#: 2 Filed: 11113/14 Page: 1 of 8 PAGEID #: 7
"

-.

'::d,~+:;1: .
.'i
,•,

..

;......._.; -

·.".':
~ ~

-

.

' -~

,.;-~~

.' :,t't.. ·- ·': -

'.=. .~··.

~·\r-'.i

.

'.

~

!

r-

!

..

,.

IT1

~:.v.:

)
)
)
)
).

!-,-~I,

--

--

, '. <6: l'l- ~(_ '<$~

I.
I.

,.,

;_:-

!

l

....

)

~­

)

,

)
)

______.....,______________________ )
~:

i
j

rr JS

Y ORDBRBD, ADJUDGBl) AND DBCRBBD:
i.

Punmat 10 thD pvy1a1ona at ts u.s.c. f687o, t1da doart1IDI camlullw

Jlll'lldlOtll:JQofWALNUl' PRlVATB BQurrY FUND. L.P. ("WP...., and all of.fta . - .

, of whabwer kind ad wheleNr 1ooated. and tbD UdlJd S...·Small BmlDlll

. ad

AdllldJdlltnalm ("SBA") II 1MnbJ appofam:l locoltm

("tbD.....,

ofWPBP 1o mrve

mdil fudbar ordar of dds Court. 'Ibo Raoefvw ii apJIOlullld tr the pmp>eo of

mmhallllai end Hqaldltlng ID an ozdll'lJ tnlDDBI' all ofWPBP'a ..-. and lldsfyJng the
; c1ahm of

2.
; haretafbte

tbmeof In tbD ardDr ofpriority u determinod by this Comt.

ThD Recetvm lhall have all powa, e•JfborldM, rJ&b*I and prlvilegea
by tbe pnend pm1Dcr, m ........ ofticcn, dftectml, hmlltment

_ _ _ _ _......_'_,,edvl=acn=-=F==-~""~o....,f__._WPBP..._...~~UIR.IDdfcdDllaw,..t>,_the_Q=rtiftcatc________ _
LmlUOd.ftilDlllllliPaad~of Umt11d Pll'lnmhtp af 11114 HmW pidlaibip. in

1

~-

tit

!:

i

ai

i

2

-

-

'
J '·

!

I'

f

l

1

I

!
A.

I

·§..

1

-~01('

.~ ~

a

·

w

f

1· - I
t2

~

.

~
~.
~

ll .
_

n

f

11'

..

.

:,~I
\"" .·

.~'\•:: •
;

·.r,

,i.

..

·1''

;-\~ .,'t

·:'fltt..--..·,
•

~ ';·-,-i~'1-~·-·~ ~~--·'-'~---""-1'·~t'"".. ~
i a. . I . .. i; .:r , , . . . ~
I I
I .~ . · S - • '

-, -,--- f ..

•'"

!'

p

I:

I
l

~ I

I

JI

•

11

A.

A.

'1 ' 1. [

.~

.·

~

~
11

t ~. 1· :

i

._

IEi.·.s~~iB.al

g

1I 1 r r I 1 1 s
~ a. s
l r

!

g

.J1:'glA~lrf

~,

g

i j ! I J1 l it i iI ~ i I! jE J JIr (Ill c i
r
'
~
r
f •
S
I i J j I i i'. 1 ; - I - i i I ~ I J i. i . '' ·~

:;:-

J

I!

"tll!

I

-

. !J

M ~
f It

'i 1~"

I

i

•'.

i; ": i . I

.... . .·• ,. .

Case: 1:14-cv-00865-SJD Doc#: 2 Filed: 11/13/14 Page: 3 of 8 PAGEID #: 9

'."-., ;

·;1·

·•

'

<

' ' r;_ .

.. .

.

CJ. ·.•.
.

> .·
.

""

,

.

. :.';, " - [

.mmar.·..... ar.u:......''.·~·''··_-:-.··~tWdJ(lO)•
· .···
~.! ··.·. ...

·'"

.,

.

·,

·.

,·,

·.;,".-.

·1 ~ . eoiqortilom..llllhpnm.w-.111.w.•~Jllllllll....,....U
' -..

pinNJDl_hnJas ocimDJ, GU8IOdy arpa•a ndo.n
·
·
.

i

~

·:

bt)ll'OJ*'lY ofWP'IJP

~

'

!

T

~to tunuucih_.. audpcopm, cmsr1o1bD-.

\ me

...

ot_,...,..

4.

The lleDlhar lhlll JllUU¥b glw .Datloo ofIll ~·•mmt 1Q tdl known
!

cac... dkan,...., .aplO)'W.~Ollid~ llDd ....,,.of'WP§,
.

~

B.olnwdem:lll Diil~ 111 arllCMllbloto o,....1he~ af1bDmuc0mldp.
'1

All

and"'*'- owJngmqohHpdcm ardebtto·~. uniU 61111mrcmtared b)'til

Coult,

Ill 8aob obHpdont Jn IDOOldaDoo wltb.1bD1m:ml ~to1be:RlaaiYll ..t ltl

.

rooelpt tbrttRJCb.paym.mda lhall havo 1ba amri b.w mt altoat 11 if.,,.,W"""PBP.,., W reoal:vecllllCh
paj1DCidB.

5.

The Reoolver II hareby 111dhorizod 10 open luah lledmtet'1 ICCOU!dll at

other finanalal lmdtutlaDI 10 mmmd oredit Oil bebalfofWPBP1 to utilbaD SBA
1D employ such otJmr pmaowol U it may deem DDO FI '1 to iilfhJtolte the

1he JeCelvenbip llKlh1din& but not 1tmttad to, attoma,I, ~· dintS. IDd
1P1Em-1JIDd II fmChar authmiml 10 upmd rooeMnbip funds~ c+HHJ'Olakt luoh
. pemmel
I

mah 11DDUD11 llild upon llUdi 1mD8 II thD ReoaJva' ahalJ deom. nmonebJo in

lisht of

. . i feel and bllllna praodooa and prooedurol of mah J'ICll'llmnol. 'l'llD R8oetwa'

ii not

1D obtain Court app:coval prior 1o the dlsbul'lamam ofl'OODMnbtp funds for
~employed b)' the RDOelver or ibr expmsea 1bat 1be Reaelwr domm

adVlm1a~IJ8 to the orcfedJ admhUtnd1oa. and operation of the noelwrahip.

3

Jn addfdcm, 1he

I.

Case: .~:14-cv-00865-SJQ Doc#: 2 Filed: 11/13/14 Page: 4 o! 8 PAGEID #: 10

, ~:::{~~.- tt~< ~ .. ::·,., . -.- . . .- .·••

.

...

l

.··~

-~

' '

,~.

•·

rr· ~·__,::;':. ...
- ,._l,

' ;

bdiw

r

.

•

•··•·

. '.
--~ ·.
-~~-,::
' :· ·
arddl~7::::::~t-..r'1 <Pi~

...

1111 __,.
. '
'
!.
WPBP'1pllta/otpr.cmlpemm,~~ ..... aciMltdlHlllJ

j

.

.....
~

~
·l mae.-:1.tabll'ObDlclam,....., c10b1mllllcml-... otWPBlrlmdatbm-~
'

.

.

J

. . l .
JmlCJDl l*hldillll wllbout 11mfCltlaD.1b.o cleftJg•t. podlbBo ot,-i hp._ amoDI

.i

,.·

mlttma*1fmdmdml dOlng bcwl1~~ daftwa.nt.mJor~ pmUbJio afllDID

.~

fi

i

l

l m.m. dnllam~ lhlJI, l1J'GD r1n1cmblodoe, ww lllldor mfl'.1D tbD

tbt ........ ,,., Plllll e.am .... ,....~l'edlall._

J
1

,_._all

ara.11

.

ad punm tharato lbaD prodaoe lllJ &oumeall • itqulncl by the RoUelwr

.

'

-l'lffftt~1ttuit'bmlnml of ml capandicm. ar my ollm maUm' raWv8nt 1D the opendian or

ldDldDiltrCcm of1ho rooamabip ar1ho ooDcailcm ott\mdl due tciWPBP. In GID mmt that

bbmt!R'deaml it DCIO a

lj 1D require tbo appel1'IDOO oftbo ~ pemca.1be
~

ar b\181:,._ operations of WPBF, ar 1DJ otbm maam re1evllnt 1D 1be opandion or
ldmilrlill~m ofthe ReoeMnhip or 1he ooUectkm of funds dUD 1o WPBF. the Reoel.ver shall

very roqaeat(1) tn oampUanoo with the notloo. ~and other Fodcnl

The pmdes orprospoottve ]mtiea to DJ and all clvll lepl prooeodlup
"--JODl!lfed,

iDDJudln& bat not Jimlmd to arbitndion pr'CJDMdiqs, banbuJ*1Y or

lbrec:slOlnllfe aedons,

default pmaeertinp, ar 8f1J other pmceadfnp bM>lvJng (i) WPBF, (ii) any

, (Hi) 1bD R=alver for WPBP or (iv) WPBF'1 Jft8elll or pat officen, dhectma,
~

--· ------111-..-jl'

pml_Jm1Dc:Q (inplpding_tM_magm_pr mmalm ofJUah.Ullllll.}1111Qg').m. ---- -

llid oiYil lrpl.poomitinp bwohemy .akm 11bn b)' 1lm wbi1o 8DdD& to thlir

4

'.

Case:

' ' '-]:'
~

.. .

1:14~cv-00865-$JD

'

'' -

"

Doc#: 2 Filed: 11/13/14 Page: 5 qf 8 PAGEID #: 11

-,

'

"

'.

i
' ~-

- .,

-,.

l

'.

l

· .·1,•

alllal'! .·

w111iWl'BP.••~•••Ul:o111~"!..... ~....._,,

........ ar O(jl•ll•mlrc 11111eptpranedna af11DJDllme wlthoCstbtbK am.ot'lhll
-

' - - - Omno, CllO No. 9978-CVP oaumtly peDdlna In tho Cumt or

fbD 8tldD of'Pelawmo, lhlll be amludod hn Ilda fqj~oa and tbo ICtlaP. lhall
poaacd ID fbDCoartal'a...cw, af1!m 8llD ~

i

8.

IDpl pooeecJmp whmwa: locatlld, fnohdna ~~

tbnlelOlllnflOltVUICB. blnkrQjJloy aodmw, er ddmlt ~but amh1dbJs tho hUlllmt
'

prooledlllll bwo1vJDa (I) WPBF, (U) any of_. of'WPBF, (Hi) tbeReoattw ibr WPBP or
pnamt or put amo..., c1hwtDl'8, nntpn, or amn1 imtara (fnobdns tho

,..,,,,.. at.um pna1 parCmr) to tho mdmt ms clvlllapl prooeedlnp mwtYe
mtheir ofDalal mpaait)r :fbr WPBP are stayedm tblilr autbety, and an ooum
ltUrl:acllatklll1beroaf ll'D cqolned ftam taklna or pa mllflua ay IOtim in nob
1Jl'mlledilli01111til tbrtbcr Order oftbla Court. Bmlpt that PBCO Loglatlaa, I.LC. v. Walnut
lnwllbnantlPlirtnam. L.P., Walnut PdYlle Bqulty Fund, L.P., MIC Capital SBIC, LP., MK

., The Prodaodvlty Pund IV, L.P., 'Ibo ProduotMty Pund IV Advllon Fund, LP.,
CJmllJl'lll&\t Partnm

12, I.LC. Chmirangc Pm1mra, I.LC, and Iamea Oz.lame, Cale No. 9978-

CVP curraitay pancting in 1hD Comt of Chancery ofthe Stam ofDelawam, shall be excloded
end the aclion shall be allowed 1D prooeed in 1he Comt of Chancwy of1he State

- - - -----' -~ _gf __ _

--·

--~-~

-- --~

s

'

-

-·

-·-;

--·--------

........._

--

-

-

-·-

-- -

-

-----

-· ---- --

not Bml10d to dostnaicm of oarpontD reocm:1I, orwhtcm would yJoJate 1be

Inv.cment A.at al 1951. • lllDmded, lS U.S.C. 66~ &.BL or tho

8mlll

mgalatlamfpmnmlptnd 1b.enlaDder ("lussn'ldom"), 13 c.PJL Pm 107.
'

11.

'Ille R.eoelwr 11authmlnd1o borrow an behalf af'~, from tbo SBA, up 10
IDd ii aathmiml 10 D8U10WPBF10 i11aC lleoa1van Cettit1oDI of1ndebteclnels

in 1bapm.... 8ilWUidB oftbo 1111111 borrowed, wbioh cartiflCldel will bmr imlliOlll Id Cll' about
IDDUDl and wDl haft a matudty dale DO Illar thmJ. 18 months llfkir flD dlte of

R.eoaMn Certifioldll8 oflndobtodocllB lball have pr1odty over all UCbar deblB and

ObUS_.tJl(of WPBF, mmludfng &dmlnlMrativo mcpe11111 of1he Realtvmbip, wbldmr
- " " " lllllCSllb• or hlnlnafter lnomrad. Jncludlng without Hml1adm 1117 olahm ofpllltDCn of

WPBF.
12.

This Court dcitmnincs and adjudicatm that WPBP hie violated the Small
_______ h!:_t,1'. JJ.!~~li§l...Cl.~Jmd.tho Ragulations.promulgatcd thereunder-at-----

1

'

13 C.F.Jt 107.1 at. mq,uallopd indlDCompWimaloclin 1hil .....

6

,.

Case: 1:14-cv-00865-SJD Doc#: 2 Filed: 11/13/14 Page: 7 of 8 PAGEID #: 13

,,. •

· . .uu.

'.'"'o."#'.
~:
~--

-4~:1.'.t·
..

-

''

!:~'

'."01_.,
,'

. , :·.
.....

.~
_

··

« -,

'.\'

'";,_~~·:

'':~·.

..
:

'

..

:'.. .....
..t

·:·
,··:

'

rll

'.

--~;_

......

:·r-·_. .::

~

H .

I

.•

t

•

.·:I

{
;;

f, l

t
t

'· ,·

... t
.. :

·1.

.' . .

;

·.·.

·-:

~--

...;,
;

~

'

'

'j

."'

'i

~

If, l#tO

1

,-."".·,.

'

\

\

l

i

j

.

j

I

~

i
i

;
"

1

~I

~

...,
;

19.

~ocnplcdngisl . . . . . . . . . . . . . . oar, 111ebdwt 11111
~

moaimmllQ1blt WPBF aIi-. is au QJC'bo mvob4 ad thltccdml oftae J.imbrw:1
,?

-------..-·20~

.

niiiimfaf'~~--!oU/(JJILJ II I/#.l1 'f"
AGBPBD BYWALNUTPRIVATBBQtmYFtJND, L.P.AND THE U.S.
11JS]lNPJIS .ADMINJSmATION, TBR.OUOB 'IHBlk DULY AU1'H01UZPJ)
Jl!PlmE$'r.'.A.11VBS:

ATE EQU1TY FUND, L.P.

7

.;"·,

.. c' se: 1:14-c -00865-SJD Doc.#: 2 Filed: 11/13/14 Page: 8 of8
.
.
•
,
,.

..

.

.

'.

.

'

;

.

.

.

'

~-

PAGEID #: 14
.

'·

..

i

I.

f
;.

... ···:-·

-:1:-

'~·'

--·-·· ---

-·-~--+--------

--------~---------

8

- - - - - - --·-----·-·----·------ --------- -------