See you in court

 Apollo v Ceva

Apollo Global Management is being sued by former executives of one of its portfolio companies on the grounds it conspired to take $20 million from them following a debt-for-equity swap.

Apollo arranged the swap in 2013 without notifying the management of Dutch logistics company Ceva, the suit filed at a Florida federal court in August alleges.

The private equity firm bought a chunk of the discounted debt before finalizing the swap, the papers claim. The restructuring allegedly allowed Apollo to maintain ownership of Ceva, but left the equity held by the executives worthless.

Ceva was the result of the merger of two logistics companies Apollo bought in 2007 for a combined $3.9 billion. Managers of the business were given the opportunity to buy shares in the combined entity, and were told “Apollo and Management will be aligned to share in value creation,” the suit alleges.

A 2013 report, published by Morgan Stanley when Ceva was going through financial difficulties, indicated the firm’s value could be $3.75 billion, high enough to satisfy debt obligations and provide value to equity holders, the suit adds.

Ceva decided the findings were “flawed and inconclusive” and the debt-for-equity swap ensued. They were subsequently informed, by letter, that it was unlikely there would be any recoveries for shareholders.

USAA Real Estate Company v Confido Advisors

USAA Real Estate Company is being sued by Confido Advisors, a New Jersey-based placement agency, for at least $3 million according to a lawsuit filed in July in New York’s Civil Court.

Confido, led by former Credit Suisse executive John Rodriguez, alleges that the San Antonio, Texas-based investment manager withheld at least $825,000 in payment for arranging investor commitments and tarnished the agency’s reputation with South Korean investors.

The placement agent alleges Susan Wallace, the former head of USAA RealCo’s global investor group, took two institutions off the prospective list and the groups later invested in undisclosed funds. It also says the firm failed to call capital, which resulted in withheld payments, and alleged reputational damage resulting from a canceled visit to an investor education seminar.

Sycamore Partners vs Dollar Tree

Sycamore Partners is being sued for allegedly breaching the terms of an agreement that formed part of an acquisition made by one of its portfolio companies.

The private equity firm agreed it would work with Dollar Tree to make the portfolio company self-sustaining after 330 of the discount chain’s stores were bought by Sycamore’s Dollar Express in 2015. However, Dollar Express has struggled and some stores are being liquidated.

In the lawsuit, Dollar Tree says Sycamore breached the material terms of the parties’ agreements and “used Dollar Express as its personal cash cow by siphoning off tens of millions of dollars to secure a quick profit soon after acquiring the business.”

As the acquired stores continued to operate under the Dollar Tree’s group name “[it] is making Dollar Tree look bad,” a source told pfm. Dollar Tree is seeking at least $50 million in damages. At the time of the lawsuit’s filing, Dollar Tree also submitted a motion to expedite the case, according to a separate court document.

Dollar Express and Sycamore have filed their own complaint against Dollar Tree, claiming Dollar Tree schemed to put Dollar Express out of business. In July, Dollar Tree sought to throw out the case. A verdict has yet to be reached. ?