United States of America v. Walnut Investment Partners

Filing 2

Copy of ORDER from USDC-Southern District of Ohio-Western Division, Case No. 1:14CV965, appointing United States Small Business Administration as receiver of Walnut Investment Partners, LP.(CS)

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Case: .1:14-cy-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 1of11 PAGEID #: 9 --·-· .., ~ 0 -r1 0 U1 c_ :r:» i'1 :z Q> I N ,, INTHE UNITED:-ST.ATES'-DISTRICTt~otJltT FOR sotrrimRN i>tstmct· of' omo ClNClNNATll>IVJSION -1 .......... ;:i:.. 0 r"1 :;;s ) ·-on,'beha:lf of its ,agency, the United. .Statfi Smilll. Bhsiness Adminbttation. 3: (;!"." -.,p• ~-$TAtEs. OF-~RICJ\, f'lt0, .... ="~ J ') ) ) Platntift,. ,s. ) ! rWALNtJT INVESTMENT PARTNERS, L.P~ ) ) ) CiV. Action No. 1: 14-cv-965 ) ) Defendant: -------.. . . ----~--------~~~~~~~--> CONSENT ORDEB OF RECElVERSHIP· I lT IS HERB8'1·0lIDERED~ ADJtJDGED AND DECREED: i i l. twsuant t~:nhe.-proV:isions of lS' US.C. §,687c, this Court takes exclusive '' JuriSdictio.n of Walnut Investrnent partners;. L.P. (i'WlP0 ) and-.atl ofits ass.ets and property, of . t . whatever kind +nd wherever lo~ted, .a,Qd the United·States Small Business Administration ! (nSBA") is he~by app<iinted:Receiver ('1theJteeeivet'"). of'WIP to s~e. without bond until i further order -otthis Coilrt. The Receiveds.appoili.ted.for.the purpose of-marsbaliing and liquidating in ·4i orderly ~~~r all. o(WIP~s assets and satisfying the c~airns of c:redjto.rs i thereoffu. the o~er-0f priority as-determined by this- Court. 2~ ' ·t.he Recei.vct shall have all powers, authorities. rights and privileges heretof~r.e pos~sed.hy the g~neral partner~ managers, officers, directors; invesbnent ! advisors. and o~er a~ents ofWIP under applicable state and fedetal law., by.the Certificate of. Limited- Partnetship and Agreement ofLimited. Partnership- of said limited partnership, m ! j I 1 0;c -,:>!~I) ~~e~·~ (;1$'-Eq ..,...'l¢',}11 o"'-."k_::. ...,,:::vr :;!::©•Fi ~~G (/);:J A-; ::;-ir. .. Case: 1:14-cV,-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 2 of 11 PAGEID #: 10 i addition to all Pi>wers Jmd· authoritr. ofa receiver at equity, and all powers and authority i c~· upon the Receiver by tbe."prbv.isions.:of l:5 ' u:S.C. § 687c and . .iiru.s.c. ,§ 75~. The managers, officers, direetot'S, investmentadv~ot$,andagettts·ofWll> are be• d*se(fand·tlre powers Qftbe·general p~~ are· hereby ~spended~.with the i exception that(~) James M~ Gould shall continue to .represent WIP on the Board .of Directors ! of ~e followin."WIP p0rtfolio concerns~ (i) The O'Gar~ Oroup. I'nc.; (U) Marian Heath ! O~ting:CardsJ. LLC; and (iii)"Seed Media Oroup, LLC on .the terms·~et by, and. at the sole. ' di$.ete.tion·of;·~ Receiver and (b)·that,.'Ftederic H. Mayersort.-ShaU co~tinue tq ~resentWiP I i on·:the Boai:d·o~Directors·of.the. foU.owing·wip portfolio concerns: (i} :PECOJ..ogistics~'LLC; i and (ii) Marian jHeath Greeting Canw; LLC ·on'fhe: terms set by. and at the sole discretion -0t ! the Receiver. l:fnless·-0therwise·set forth herein,~ managers, office~ directors, investment • I advisors and ~ts ofWIP shall have no authority with respect to WIP's operations or ' assets.. except t~ the extent as may ·h~after be expressly granted by 1h~ Receiver. ne i ~eivet shall ~smne and ·' . . . . . conU'Ol the operation of WIP and shall pursue and preserve fill ·.of ; its claims. lne past .and/or present generaJ partners. managers•. o.fffoets~ directors,. .3. .mvestine.nt adv.fsors~ ageil~,' ltlistees.. attorneys,. accountants, and employees of W1P, as well l . as .all those ·ac~g in their place, lµ'e hereby ordered and directed to UU'tl·PVet to the Receiver i fptthwith a11 t,~k$, tecord$;.d0cuments'; accounts and all other. instruments and· papers of and. I relitmg ~o WIP!and its assets and all other ~_sets ·ana· property .ofthe corporation, ·whether . I ' . I real or person.ail The General Partner and/or other agent of WIP, shall fumiSh ·a .wP,tten i ' statement withip ten (IO) days after the entry Qf tbis:Qtder, listing the id.entity, location and , ·estimated valud-of'all assets ofWIP as well as the ruunes. ad4resses and amounts of claims of ! Case: 1:14-cy-00965-SJD Doc_#: 3 Filed: 12/23/14 Page: 3 of 11 PAGEID #: 11 ' all kt)own credilors ofW.IP. Within thirty (30) days.following: the: entry ofthis Order; sueh pemoil shall als+ furnish a-written report describing all assets. All-persons haVing contr.ol, custody·.or poss~iOn of.any assets or property of WJP are h~reby dire.ct«! to tum such assets . . : t -and property ov~r to,the Receiver. ' 4. ine Receiver $ball.promptly giye :notice o'tit$. appointment to all known 1 . padne~, ofticetf• directors~.agents, employees, shateholders1 creditors.and debtors ofWIP, as the Receiver reems ·necessary or·advisable to effectuate the Operation of the .receivership. .Altpe.mons·and~titities owing any· obligation or debt to WIP, ·until further ordered by. this ; CQurt, pay~ mkh: obll~tiQn~ . in accordance· with the terms thereof to. tbe.:Receiver- anf!l its . r . . receipt for such raymeiltS shall have the same force and effect as 'ifWlP hacheC,eived such ~)'Diellts. ' 5. 'lthe Receiver is hereby authQri~d to open:sµch.Rece.ivet's accounts at. . . ' banJci.ilg·-Ot c;>t,he~ financialinstitutions to·ex.tend·credit·on behalfo-fWIP.. to utilize.SBA i ~onnei, and t4>· employ such other·personnel as 'it mJ!,Y- d¢~m ·neeessary to effectiliite lhe ! Q~on oft.be ~~eivership :includ~. but nofllinited 'to, attorneys, a.ccounUm-ts, .and ' appraisers, and i~ further authorized to expend r~eiversbip funds to c.omPen.se.te such personnel 'in.sue~ amQunt$·an~,upqn such.terms.&$ the Receiver Shall deem r~onable i~ . light of the . u:suaJ fees and billing practices and·prooedures Qfsuch personilel. The Receiver i is not required t~' obtain Court approval priQrto thl:Hlisbtirsement of reeeivership.funds for . payments·to pe~nnel employed by the Reeeiv~ pr for expe,nses Umtthe Receiver.deems i ac:lv-.tageoqs tQ !fhe .orderly admirtiStratiort and operation oC-the receivership. In addition~ the I ! ,Receiver is .4uth.rized to reimburse the SBA for travel expenses incurred by SBA personnel in the establishntep.t and adorin,istration ofthe receivershjp. The R~eiver·may, witbou,t ! . Case: 1:14-cV,-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 4 of 11 PAGEID #: 12 further-order or'this Co~ transfer, tomproliUse, or otherwise· dispose of any asset (incl~ing; without limitati~l;l any claim); other than real estate. . . ; . -~. W:lrs past ~d/or·pn=sent partners~- officers,·diteetors,_ .~gents; accountants, ' .managers, .sbar+old.ers, employees, debtors and ·creditors of Wii> and other appropriate persons (includi~g witbo'!lt limitaition. the defendant's _portfol_io· of.small .business. con-cems l -and-.financial i114titutions doing_ ·business. wjih defendant andhtt defendant's portfolio Qf small ' busiile$S concetjm) s~l, upon ~ble notice, answer. unc:Jer oath to the 'Reeeiyer all ! quastioris:.Whi~.The Receiver may _put to.them in compliance with tlie Federal Rule's: ofCivil Procecture,.-and ~utsuant t®~to-sball produce any documents as.-.,equired by the- E,9ceiver. ; regarding-the b'fsiness of.said .corporation, .or any other matter ieleY.ant- to the epemtioh or ®mi'sµstrafien qfthe teceivet:sbip or the collect.ion of funds.due·:to ww.. .ln the-eve~l1hat me- Receiver deem~:it necessary to require the appearance·ef the aforementioned persons, the ! production of d~umenlS.-infonnation, or any other diseovety-.conterning the $Sets, properfy or buSinesS ope~tions of WIP, or any:.othcr matter relevant to the, operation or administration ·of.the Receiv~p or·the- collection:offOndS du.e to WIP, the Recetver shall make its I . . discovery requt$t(s) in compliance with the .notiee1 -subpoena and other- Federitl Rtiles of . I Civil -Proced~ 'fhe parties or prospective parties to any and alt civil legal ·proceedings ' i wherever· locate-, including, ·but ·'10t limited to ·aroi~on.p.1'9ceedings, bankruptcy· er "7.. :fureclosute a.cti~D.$,. default proceedings, or any other proceeding~ involving (i) WJP, .(ii) ~Y. ! assets of WW.,. . 4ii) the ·Receiver for. WW or (iv) WlP's present or·past officer~, directors, . lllib,agers, -or ge~eral partner8 (including the 1.11~~ or me1.11bers: of:such general partner) to I the extent W.d~~ le~ proe~~Jnvolve,:any-action t$kenby tbeinwhile aetlngintheir ' 4 . ' Case: 1:14-cv-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 5of11 PAGEID #: 13 I o.fficial capaeit)'jwlth. WIP, ate·enjomed :fr.~m lakin1r~raction, :including discovery;o I -0ommencing or.~ntinuing any-lepl proc:;eed..U;ig of..1!1ly·_n.ature. without further order· ofthis Court;. Except ttJtt PECO LOgistics, LLC; v. Wiln1,1Unve.stment Partners, L.-P.,-WalnutPrivate ; ·&J_w'"t{FUil.d, L.~., MK Capital SBIC, LP-.t·MK.Capitai; LP•; The.ProductivitY Fund TY, L.P.; Tbe;P~tiyitj Funci lV Advtsors·Fun(t, L;tt.;~ange.P.a,$ers 12. LLC, ~ge i Partners, LLC, 1*id James 07.8lllle, Case.No. 9978-CVP cunently pending in the Court of '· c~~·Qf tb~-~ of Delaware~ ~all® ·e~cluded:from·.such inj\Jnction and. the.action shall ; 8. ' ~11.-civff legal proceedfu~s wherever"lacated, including arbitration proeeedings~ fotoclosure .acti~ties, bankruptcy actions, or default proceedings, but excludi:ng·fhe instant p~eeding, inv~g (l) \Vil', ·(ii) an;. ofas9$$ of WIP? ~iii) the Receiver for WJP or(iv) I j WIP's present o~past officers, directors, ·-~gers, or general partners (inciuding ~e managers I or members of~ ge®ral.pa,rtne.r.) .to.,the.·~xtent said civil legal proceedings involve any ! . . ·action taken in ~eir official capacity fur WIP. are- ~yed ·in their entirety~ and·all .tourts having any:juri.sdictj.on (hereof ate enjoined ftotil. taking:or·pemiittiitg:any-action in such proceedings . ! . . until- further Orobr of th1s·.Court•. Except <that'P.ECO Logistics,, I.LC, v. Walnuflnvestmen~. i . "fainut J>ri:vale. Equ)ty fund,. tip., MK Capital SBI~ L.P~. MK Capital~.L~P;, I Partners, L.,P ., The Productivi~ Ftmd IV, L.P.,.The Productivity Fund N Advisors Fund, L.P., Greenrange Partners 12, LL¢, Greenrange Par:tners:. LLC, ·an4 Jam~-Omnne.,. Case No. 99.78~CVP curtently.pendin~ in the CourtofChati:cery-oftheState ofDel;.tware, sh~ b~excludedftom I i sud:r:$.ta.y and th~ aotipn shall be· alfowed.:ta ptoeeed.:m.·the CoUrt of ~eery. ofthe State of ' . ' Delaware. 5: Case: 1:14-c~-00965-SJD 9. Doc#: 3 Filed: 12/23/14 Page: 6 of 11 PAGEID #: 14 .irUrthet, as to .a .cause of a.ctiun accrued or accruing in.favor,of WIP-against a r tbinl :person or·~, any a.pp~able statute oflimitation is tolled· to the-extent ·anowed by ! applicable law 4ut1ng-the-period in which this iiljurtction ~airist COilllllencement of legal pt()Ceedings. is 10. in effect as to-that~~ -of action. WIP and its past and/or present managers, general partner or: limited partners. oftiee~ direc*, ~gen.ts, investtnent-advisors. employee$ and other ~sons acting .in ! conceit or parti~ipating·:tberewith -be,.·and they-hereby are, ell}oined ftom either _directly or indirectly takin$ any actions or causing any such action to be·tak~n which w.ould dissipate l the assets and/~ pro~ey ofWIP t9 the.detriment of the Receiver appointe<J in this cause, inctuding ·but n+Uimited to:destruction of..e.orp,ohtte recor~ or whlch would violate·-tJ'ie ! . I Srnatl Business!lnvesbnent A~tof1958, as.ame~d~, 1.5 U.S.C, .661 m:. ~or the ! regt.ilations pro'1ulgated· thereundet'("Regulatiolis.11 ~; 13-C.RR. Pan 107. i 11. The· Receiver is ~uthprizecr to bQ~w on belµij.f ofWIP; from the ·sB~ up to ! *2;000,000_, an4:is authorized·to-cause WIPto issue Receiver's Certificates of Indebtedness. in f ' the prlneipal anicmnts of the sums bottowed, which certificates will :bear-interest at or about i-0" i _percent per ann~ and. will have ·a maturity date no later'than 18 ·months after the date of issue. S•4 .R~iver's !ce~•es of ln4ebtedne$$ $.all have priotity·over ~l other debts and ·oblig,Uioris· of WlP, exclud!Qg.adniinistrative.e~nses. of the· Receivership, whether presently ~ . eld$ting orh~efhaftet incutred, including. withoµt litnitation any·c::laims of pa.J:tners ofWIP. I 12'. 'PUs Court determines and adjudicates that WIP has violated the :small Business Investment Actj ts·u.s.c..66i et.. seq, and the RegulatioJts promulgated thereunder at 13 I ; C.F.R. §107.t ¥seq, as alleged in.the Complaint-filed in thiirmatter, 6 Case: 1:14-c~-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 7 of 11 PAGEID #: 15 I . Mei: completing its activities in· ac.cordance with ibis Order, tb.e·.Receiver mtly 1l.. recmmnend·tbat·Wn>. s license. as.an SBIO be· revoked and.that control ofthe Jbrµted partnership be·returned to WIP's genenµ partner andlor.lts·designee·ot successor in interest. SQ ORllERED ltms I \ .,J:... day of "\s~E:.A. ' 20_!1. . ! Ta~· HONORAilLE UNJ.TBD STATES DISTRICT COURT .ttJDGE ! ! . -SEEN AND A$£ED BY WALNUT lNVESTMENT"PARTNERS LP. AND THE U.S. SMALL BusINP:!ss ADMINISTRATION, THROUGH THEIR DuLy AUTHORIZED REPRESENTAtlVES: I . I WALNUT INV*STMENT PARTNERS, L.P. ; By:c W$lnut.Invcistment.Hol~s co, LLC It$ Oeneraj Parm,Fr .,i . By: . . ·. ) .. F~eric H.thltlyers~.a .tvl~aging M~be i By:: Dani~l Siat1>~ a M1lllaging· Member By: Joseph oaif ~·~ memb~r ! U.S. SMALL B~SINESS ADMINISTRATION B.y:'-------+.---.,..,.--Thomas O .. t+forrls, Difector Office .of SJ¥C·Liquidanon 7 Case: 1:14-cv-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 8 of 11 PAGEID #: 16 Mter comple~g.its. ~vities·in ~~.wi~ this Or4er, the Receiver.may 13. recommend that l\vn> ·s licen8e as an smc·be. revoked and 1hat control of the limited . . . ! partneiship be ~ .to ·ww.2s general partner .and/or it$·4esignee or W,CeeSSor in ln•re.st SQ ORDERED~(hl~: l :~..f day-of ~~\)~ct. ; 2Plf ' ·nd:aoNoRAbiE UNITED STA.Tj?S·DISTRICT COURT JUDGE I SEEN AND AGlmED BY WALNUT lNVBSTMENT'PARTNERs~·L.P. AND'TI:IBU.S. .SMALLBUSINB$s· ADMINISTRATION, THROUOlI TlmIRDULY AUTHORIZEO .RBPR.EsENTAtIVES: ·WALNUT nw.kSTMENT PARTNERS~.l..P. ! . ' By; Walnutlil~ ffoldinp CO., LLC lts Genen.al~~r ' '' ' BY!.' ·Frederic H ~yerson, a Managing.Member By! Daniel. Stat~~ aMana~g Member u~s. SMALL e~snmss A.P~JNISTRATION j By:' . Thomu o~ Morris, Director omee tir S1$c Llqmdation 7 Case: 1:14-c~-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 9of11 -PAGEID #: 17 ~ ~letlng!ts actiVi~ µi acmrdance·with·this·~>· the·R~ermay 13.. reeonmieml~ WIP·s·lieettBe--as· an SBIC-be .-evobfJ.-and tlutt control of tbe;.liinited partnetsbip be·rkurne~t:tQ· Wll>'s general partnerandi.or.ita d~ignee or ~ssodn interest. ! SOOIW~~ this _ day or ------· 2Q_~ .. UNn:EP ,$T.t\'fBS DI$TRICT COURJ rubGB . SIEN ANO AtmBED BY WALNUT ffiVBBTMENT PAR!NERS, t.P. ANO: nm·u.s. Sl\fAU., BUS$asS ADMINISTRAt!ON> Ta.ROUGH TaBIR DULY AUTHORIZED RBPRBSBNtA.TIVB.S: WALNUT By~· oofBSTMENt P.Alt.TNBR&, L.P~ : WalnµUnt,estm:entHQldings CO, ·LLC Its Genenl Patjner . .. By: I . .I . . . James.M.1Gould.. a Managing Member I ( L hUSINBSS ADMiNISTRATION l· By: ! Tho~ :MOlTiS, DireCtor Offiot ()f . IC Liqw~tion 7 -. Case: 1:14-cv~00965-SJD Doc#: 3 Filed: 12/23/14 Page: 10 of 11 PAGEID #: 18 fJlet completing·"its·actiflties iil.accotdance·With this Order, the Receiver may I 13. recommend . that! WlP s license 'as ~ SBIC"'bl?~~Qkeµ and that· control- ofihe1imited ·partnei'Shi'.p be r~tutned ·ro WIP"s .general partner..and/or itS, design~ ()t -successor jJl. mterest . I . ' SO ORD~tbis _ _ day of ......_...__. . . . . . . . _, 20_. l ! 1JIE HONO · E.pNfroD. STAit.Es DISTRICT COURT WOGE - ! . . :SEEN AND Aq~ED BY WALNUT iNVESTMENTPARTNERS, L.P. ~THE U.S. SMALL_ BUSilffl.SS, :ADMINISTRATION, THROUGH THEIR DULY AUTHOruzED . RP.PRESENTAiTlVES: WALNUT ~STMENT PARTNERS, LP. Sy~ W.alntJt'.Uivbtment Hot~ CO, LLC Its"Genera.l Partfr ' By: James Go1d. a Managing Member ·ay;..Frederic· Mt1erson, :a MEµt8JPng. Member . By: .:Omnel Stmf.ton, a Managing.Member . ' . i ' "By:· Josei)h"4antz. a.managingmember ~u:s·, SMALL Bl.JSINESS ADMJNJS!RAtlbN i 7 Case: 1:14-cvfo0965-SJD Doc#: 3 Filed: 12/23/14 Page: 11of11 PAGEID #: 19 i 13. .Alfter compl~ting its activities in accordance wi~ tbis Order~ the Reeeiver may i. teeo~nd that "tVn> ·S license as an SBIC. be revoked.and that control ofthe1imit&l p~ei;Ship. be·re#Jmed to WIP's.general partner.and/or its.designee :or success.or in lnte,rest. ! . . r,J_ "ii so.:o.RDERED·thls ~ d~yof 4-/UJe._ ; .· · HONO LE UNITED STAT.$ D:IS .,.:201!/ ' CT COURT JODG:E AND .SEaNANDAGtmED BY WALNUT INvESTMENTPARTNERS, LP. THE U.S. £MA.LL BU~Jt¢~s A?MXNISTAA'tlON, nm.ouGH THEIR.DULY AU'.THOR1ZED· REPRESENTAiiVES. W~NOT INVJ$sTMENT PARTNERS, L.P. , By: Jamei.Goulkl. a Managing Member ! Byf .Joseph. Ga$; . a M&naging Member i . 1].S:. SMALL BbSINESS ADMINISTRATION llJ;·.__..__...,..._._ _ _ _____ Thomas. G. ?tlorris, Director bftic_e, of SB!IC Liq'1i_datio~ 7

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