United States v. CEO Venture Fund III, L.P.
1:08-mc-00069 | D. Colo. | Dec 29, 2008
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Be'bro this Court is the motion by the United State¢ of America, on behalf of the
United Statos Smal] Business Administmfion (“SBA"), for a preliminary and perrth
injunction and the appointment of the SBA as Permanent Reoeiver for CBO Venture
Fund III, L.P. Thc-Coun, being fully advised lathe merits and having been informed
that CED leum Fund Hl, L.P. has consented to the relief reun in the moh'on,
hewa
ORDERS, ADJUDGES A.ND DECREES TH'AT:
I. Pursuant to the provisions of 15 U.,S.C. § 68'7¢:, this Court shall take
exclusive jurisdiction of CEO Ventun: Fond IIl, L.P. ("CEO"), and all of its assets,
wh¢¢mr lmc¢d, and me united sum small lansing Adminimuon ("sBA"),¢ is
hereby mpointed receiver (“the Rnociver") of CBO to serve without bond until flth
order of this Coun. The Rmciver is appoinwd for the p\npose ofadminis¢ering,
marshalling lnd, if necessary, liquidating all of CEO'! assets 10 satisfy the claims of
auditors thoro&om in the ord¢rofpr{ozity as determined by this Couct.
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2. 'Ihe Raeeivershall have all powers, audioritr`es, rights and privileges
heretoforemessedbythegmeralparmors,managm,omcas,mddimetomofCEO
underapplieablestateandlbderal iawandbytl're€ertiiieateandl.irnitedl’armuship
Agreement of said parmeraln'p, in addition to all powers and authority conferred upon the
Rwelver by theprovisions of 15 U.S.C. § 687c and 23 U.S.C. § 754. The general partners,
manners- di!wl°rs, officers, employees and omits of CEO are hereby dismissed Such
pusonssl'rallhave no wtlwritywithreapeettoCEO'soperatiom orassets,exeeptasmay
hereafterbew¢!>!¢$lygranbdbythelteeelyer. `l‘l'rellwelvershallassmneandeormnlthe
operation ofCEO and shall prime and preserve all of its claims
3. The past endlor present oflleers, dkeetors, agents marragm, gamut
partners aceountarns, attorneys andemployees of CBO, as welles all those-acting in their
plaoe, are hereby ordord and directed to turn over to the Receiver forthwith all books,
reemis, doouments, aceountsandall other instnmrentsandpapersofsaidpamershlp and
all otirerassetsandpropertyoftireparmeralrip,whedrerrealorpersonal uponreeeiptof
instructions by the Reeeiver regarding the time and plane of such production CEO shall
furnish a written statement within Bve (5) days after the entry of this Order, listing the
identity, location and estimated value of all mds ofCEO as well as the names, addresses
md morrow ofalaim= ann brown swaim or ch. An persons having mmr-amy
or possession of any assets or property of CBO. including CEO"s fenner general partner
and former management eompany, are hereby directed to turn such property overto the
Rw.eiver.
4. 'l`he Reoeiver shall promptly give notice of its appointment to allknown
general and limited parmers, oliicers. dlreotors, agents, managers, employees shareholders
Case 2:08-mc-00346-DSC Document 2 Filed 12/17/2008 Page 3 of 14
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meditors, debtors and agents of CEO. Ail persons and entities owing any obligations or
debts to CEO shali, until further ordered by this Court. pay all such obligations in
acwdmeuddrthemmsdmenfmthehceiver,mdiumcdptfmsuchpaymenmshau
havethcsarneforeeandefl`ectasifCEO had~recelvedsuchpsymenta.
5. 'l`he Receiver is hereby authorized to open such Receiver‘s bank accounts. at
banking or other linancial instihrtions, to errtend creditonbehalfo{CBO_, to utilize SBA
pusomel,mdmmp|oymwhodmpemnndasmcessmy-wed'eenmtetlnopmuonof
the-receiversal including but not limited to, attorneys and accomtants, and is further
authorized to expend receivership funds to compensate such personnel in such amounts end
upon mich terms as dre,Receiver mall deem reasonable inthr ofthe usual fees and billing
practices and procedures of such pcrsonnel. 'l'he Reecivor is not required to obtain Court
approval prior to the disbursement of receivership iinrda for payments to personnel
employed by the Receiver or payments forerq)cnses incidental to administration of the
Receivership. In addition, the Receiver is authorized to reimburse the SBA or ita
employees for travel expenses incurred by SBA personnel in the establishment and
administration ofthe receivership The Recelver may, without further orderof this Court,.
transfer; compromisc, or otherwise dispose ofany claim orasset, otherthan real estate,
whichwouldrresult innctpmoeodstotlreReceivcr.
6. CEO's past and/or present oft'icers, directors, agenta, managers general
partnera, shareholders, employees and other appropriate persons (including, without
limitation, CEO's portfolio of small business concerns and banks or other financial
institutions doing business with CEO end/or CBO'& portfolio of small businc¢ comm)
shall answerunder oath all questions which it may put to them by the Reoeiver regarding
l
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thebusimsofsaidparmership,ormyodwrmadermlevanttotheopmtion or
administration oftire receivership or the collection of funds due w CEO. ln the event that
the Reoeiver deems it necessary no require the appernance of the aforemention persons,
the production ofdocurnents, infonnation, or any other form of discovery concerning the
assets, property or bnainl¢ assets of CEO or any other matter relevant to tire operation or
continuation crow neceva or are collection cramer due w cao, are wire shall
directnoticeforanysuch appearancebycerlilied mai|,and saidpemons shall appearand
giveanswer to the Recelver, produce documents orrubrnit to any other-form of discovery
in accordance with the Federal Rules ol‘Civil Procedure.
7. 'l'he parties or prospective parties to any and all civil legal proceedings
wherever located, including but not limited to arbitration prooeedings, bankruptcy or
foreclosure ectiona, default proceedinga, or any other proceedings involving CEO or any
assets ofCI:`.O, involving CEO or its present or past ollicers, directors, managers, or general
partners or the Receiver, which parties have sued or have been sued for. or in connection
wich, any action taken by CEO's oEleers, directors, managers, or general partners while
acting in such capacity whether as plaintilf, defendant, third-party plaintiff, third'party
defendant,' or otherwise or with respect to any assets ofCEO, are enjoined from taking any
action, including discovery, commencing or condoning any legal proceeding of any nature
inconnection with any proceeding
8. All pending civil legal proceedier wherever located, including arbitration
proceedings, foreclosure activitiea,_ bankruptcy actions, or default proceedings, but
excluding the irrstanl prooeedlng, involving CEO or any cf its mrs or any action of any
nature taken by CBO's present orpast odicers, dlrectors, rnanegera, or general partners.
Case 2:08-mc-00346-DSC Document2 Filed 12/17/2008 Page 5 Of 14
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which parties havesued orhaveheen sued for, orin connection with, any action taken by
them while acting in their official capacity whether as plainti&, defendant, third-party
plaintiff third-party defendant or otherwiae, are stayed in their entirety, and all Courts
having anyjuriadiotion thereof are enjoined front taking or permitting any action until
further Ordcr of`this Court.
9. t CEO and its past and/or pruent directors, odicere. managera, general
pamers, agents, employees and other persons acting in concert or participation therewith
he, and they hereby are, enjoined ii'om either directly or indirectly taking any actions or
causing any such action to betaken which would dissipatethe asaetsand property ofCEO
to the detriment oftheR.ecciverappointcd in this came including but not limited to
destruction of partnership records, or which would violate the Small Business Investment
Act of 1958. as amended, (thc "SBl'.A"), 15 U.S.C. Secticn 661 et mg or the regulations
prompted newman colo "Rogolouooo"), 13 c.Fn. § 1011 _o_; E.
10. 'Ihe Reoelver ls authorized to horrowon behalf of CEO,i'rornthe SBA, up
to 3500.000, and is authorized to cause CEO to issue Reoelver's CertiEeates of
lndehtedoeasinthe principal amounts ofthcsums borrowed.which certificates willbear
interest at or about-ten(lO) percent perarurum and will have amaturity date no laterthan
18 months utter the date of leme. Said Receiver'a Certiiieates of indebtedness shall have
priority over all other debts and obligations of CBO, utcluding administrative expenses of
the Receivership, whether woody erdsling-or hereinafter incurred, including without
limitation any claims of equity holders in CBO.
ll. This Court determines and adjudicates thatCEO hac violated the capital '
impairment provisions of the SBIA and the Regulatiorra, as alleged in the Stipulated
CaSe 2208-mC-00346-DSC DOCument 2 Filed 12/17/2008 Page 6 Of 14
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Compiaint for Bntry of Consent Order Appointing R.eceiver filed in this matter. Afcer
completing its activities in accordance with this Order, the Receiver may submit a report to
this Court mommending that CEO‘s license as an SBIC be revoked
AGREED AHD ACIUOWLEDGED:
CEO VENTURE FUND lil, L.P.'
s/Ma,_/
l its ..»#
on this /_~\ day ofDeoember, 2008.
U.S. SMALL BUSINESS ADMNISTRA"|'ION
By:
Michele Long Pittman, Acting Director
Oftiee ofLiquidation
on this ____day ofDeeember, 2008.
SO ORDEREDthis __ day of _ , 2008.
mrs ndNomLs
minn grams march moon
CaSe 2:08~mC-OO346-DSC Document 2 Filed 12/17/2008 Page 7 Of 14
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By:
its
on this day of Dcoember, 2008'.
U.S. SMALL BUS!NESS ADMINISTRATION
longPi
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THE HONORABLE
UN]'I'ED STATES DISTRICT JUDGE
CaSe 2:08-mC-00346-DSC Document 2 Filed 12/17/2008 Page 8 Of 14
' lN THE»UNITED STATES DIS'I'RICI` COURT
FOR THE WESTERN UISTRICT OF PENNSYLVANIA
UNITED STA`I'ES OF AMERICA, §
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v., § Civil Action No.
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Before this Court is the motion by the United Ststes of America, on behalf ofthe
United St.-.tes Small Business Adrninistratlon (“SBA"), for a preliminary and permanent
injunction and the appointment of the SBA as Pernranent Reoeiver for CB{) `Venture
Fund llI, L.P. 'I`lre-Ccurt, being fully advised in the merits and having been informed
that CEO Venture Fund ill, L.P. has consented to the relief nqueswd in the motion,
hewitt
ORDERS, ADJUDGES AND DECREES TH`AT:
l. Fr.trsuant to the provisions of 15 U.S.C. § 687e, this Court shall take
exclusive jurisdiction of CEO Venture Fund IlI, L.P. ("CEO"), and all of its essets,
wherever located, and the United Statee Small Business Adrninistration ("SBA"), is
hereby appointed receiver (“tbe Rweiver”) of CEO to serve Without bond until further
order ofthia Court. The Reeeiveris appointed forthe purpose of administering
marshalling and, if necessary, liquidating all of CEO's assetstc satisfy the claims of
creditors therefrom in the order of priority as determined by this Court.
Case 2:08-mc-00346-DSC Document 2 Filed 12/17/2008 Page 9 of 14
2. The Receivershall have all powers authorities, rights and privileges
huetoforepossessedbj'tbegerteral parmers. managers,otiioers,anddireotorsofCEO`
under applicable state and thderal law and by the Certllicate and Lirnited partnership
Agreernent`ofnld partnership, in addition to ali powers md authority conferred upon the
waiver by are provision of rs u.s.c. § soto md rs u.s.c. § 754. nrc general powers
managers directors, ohieers, employees and agents oi`CEO are hereby dismissedl Such
persons shall haveno authority with respect to CBO's operations or mets. except as may
hereaherbeexpresslygrantedbythekeoeiver. 'l`heReeelversha]l mmcandcontrol the
operation of CEO and shall prnsue and pmerve all of its claims
3. Thepastand/orpresentoftiem, directors,agents,mansgers,generai
partners, accountants attorneys and employees ofCEO. as well as all those actingin their
place,areheteby-ordered anddireetedtonrmovertotheil.eoeiverforthwithallbooks,
moords,domumnm,aeoommmddlodzrdnnwnmwandpapersofsaidparmrsldpmd
all otirerassetsandpropertyofthepartnershlp,whotherrea| orpersona.l uponrweiptof
hrsttuctions by the Receiver regardingth time and place of such production CEO shall
furnish a written statement within dye (5) days alter the entry of this Order, listing the
identity, location and estimated value ofa]| assets ofCEO as well as the nunes, addresses
and amounts of claims ofall known creditors of CED. A.ll persons having eontrol, custody
’ or possession ofany assets orpropexty ofCEO, including CEO‘s fenner general partner
and former management company, are hereby directed to turn such property over to the
Rec.oiver.
4. 'Ihe Reeeivet shall promptly give notice of its appointment to all known
general and limited partners, oMcers, directors, agents, managers, ernployees, shareholders
Case 2:08-mc-00346-DSC Document 2 Filed 12/17/2008 Page 10 of 14
creditors, debtors and agents of CEO. All persons and entities owing any obligations or
debtsto CBOshall, until fm'thcrorderedbythis€ourt. payall suchengations in
accordancewiththe tennstllcr`eoftotheReceiver, and its mceipt`for such payments shall
havethesameforecandeffeotasit`CEOhadreceivedsuchpaymants,
5. TbeReceiverislwrebyauthorincdtoopensuchReceivefsbmkwcormts,at
bankingorother iinancial iastitations,to extend creditonbehalfofCEO_, touti.liaeSBA
persormel,and toemploysuchcdrupersomrelasnececsarytoenbcmatetheoperntionof
thereeeivership including but not limited to, attorneys and accomtants, and is further
authorized to e)q)end receivership hinds to compensate such personnel in such amounts and
upon such terms as the Receiver shall deem reasomble in light of the usual fees and billing
practices and procedures of such petsomrel. The Receiver is not required to obtain Court
approval prior to the disbursement ofmeivership funds for payments to personnel
employed by tire Rweiver or payments ibt expenses incide to administration of the
Receivership. in addition, the Receiveris authorized to reimburse the SBA or its
employees for travel expenses incurred by SBA personnel in the establislunem and
administration ofthe receivership The Receiver may, without furtheroder of this Court,
transfer, oompmmise, or otherwise dispose of any claim or asset, otherthan real estate,
which would result wasmdswneswav¢r. '
6. CBO's past and/or present ofticers, directors, agents, managers general
pamers. shareholders employees and other appropriate persons (including, without
limitation, CEO's portfolio of mall business concerns and burks or other financial
institutions doing business with CEO and/or CBO"a portfolio of small business concems)
shall answer under oath all questions which it may put to them by the Receiver regarding
Case 2108-mc-00346-DSC Document 2 Filed 12/17/2008 Page 11 of 14
the business of said pamership, or any other matterrelevan.t to the operation cr
administration of the rweiverahip or the collection of hinds due to CEO. ln the event that
the Reoeiver deems it necessary to acquire the appeai'mce ofthe aforementioned persons,
the production cfdocuments, infonnation, or any other form of discovery concerning the
mempropertyorbuaineaaaaaetsof€£O orany othermattertelevanttotheoperationor
acbniniatration of the Receivership or the collection ofiirnde due to CEO, the Rweiver shall
direct notice for any such appearance by certified mail, and said persons shall appear and
giveanswartothe Receiver, produce doctnnents oreubmittoanyotherform ofdiecovery
in accordance with theFederal R.ulce ofClvil Procedure.
7. 'l.'he partial or prospective parties to any and all civil legal proceedings
whereverlocated, including but not limited to arbitration proceedings, bankruptcy or
foreclosure actiona, default proceedinga, orany other proceedings involving CEO or any
meter ofCEO, involving CEO or ita present or past oliieera, directors, managers, or general
partners or the Receiver, which parties haveaued orhave been sued for, orinconnection
with, any action taken by CED'a ochers, directora, managers, or general partners while
acting in such capacity whether aa plaintiff, defendant third-pmy plaintiff, third~pmty
dcfendent., or otherwise, or with respect to any assets ofC‘EO, are enjoined from taking my
aetion, including dlaeovery, commencing or continuing any legal proceeding of any nance
in connection with any proceeding
B. All pending civil legal proceedings Wherever locetcd, including arbitration
prcceedinga, foreclosme activitiea,_ bankruptcy actionc. or default proceedings, but
excluding the instant prcceev.'iingl involving CEO or any ofits assets or any action oi"any
nature taken by CEO'a present or past edioers, dieeotors, menagera, or general partnera.
Case 2:08-mc-00346-DSC Document 2 Filed 12/17/2008 Page 12 of 14
which parties have sued or havebeen sued tbr, or in connection with, any action taken by
mwhrlwangrnueooarcumpa¢nywh¢wnpranaadefenmoorrd-pmy
plaintiff third-party defendant or otherwise, are stayed in their entirety, and all Courts
having any jurisdiction thereof are enjoined from taking or permitting any action until
further Order of this Corn'L
9. CEO and its past and/or present directors. oEicers, nranagers, general
partrers, agents, employees and other persons acting in concert or participation therewith
he, and they hereby are, enjoined ti~om either directly or indirectiy taking any actions or
cmrsingenysuch action to be taken which would dissipate the assetsand property ofCEO
to the detriment of the'Receiver appointed in this carrae, including hut not limited to
destruction ofpartnership records, or which would violate the Srnali Business Inveatment
Act of 19$8, as amended1 [the "SBIA"), 15 U.S.C. Section 661 et gp or the regulations
promulgated tlre¢emrder, (the “Regulations"), 13 C.F.R. § 107.1 g W.
]U. TheReceiveris authorizedto borrowonbehelfofCEO,fromtheSBA,up
to 3500,000, and is authorized to cause CEO to issue Receiver's Certilicates of
Indebtedneas in the principal amounts of the sinus borrowed, which certificates will bear
interest at or aboutten (10) percent perannurn and will have amaturity date no later than
18 months after the date of issue Said Receiver's Certilieatea oflndebtedn¢a shall have
priority over all other debts and obligations of CEO. excluding administrative expmsea of
the Receivership, whether presemly artisting-or-hereinafler incurred, including without
limitation any claims of equity holders in CBO.
ll. 'l`hisCourt determineaandadjudicstesthatCEOhesviolated timecapital '
impairment provisions of the SBlA and the Regulations, as alleged in the Stipulated
Case 2:08-mc-00346-DSC Document 2 `Filed 12/17/2008 Page 13 of 14
Complaint for Bntry of Cousent Order Appointing Reeeiver filed in this matter. A.tier
completing its activities in accordance with this Order, the Rweiver may submit a report to
this Court mommending that CEO‘s license as an SBIC be revoked
AGREED AND ACKNOWLEDGED:
C`EO VENTURE FUND III, L.Pi
lirr/j /€£'-`-/
on uthis /~i~/ _dayofDecemher, ZOOB.
U.S. SMALL BUSINESS ADMIN!STRA'I'|ON
Miclrele Long Pittrnaa, Acting Director
Otiice of liquidation
on this ___ day ofDecember, 2008.
soormrrrra‘.man___day of__________, zons.
innocuouser
moran status ors'rnrc'r moon
Case 2:08-mc-00346-DSC Document 2 F'l|ed 12/17/2008 Page 14 of 14
Comlaint forEntryofConsentOrdu'Appoint`ngmeii/ertiledinlhismatter. ABer
completing its activities inaccordance wit‘nthisOrder, theReoeivermay aarbnritareponto
thisCorntmcmmendhrg-thatCEO’slicenaeasanSBICberevolted.
AGREEDANDACKNOWLEDGED:
crovsriruasruunm,r.r.
By:
its
on this day of December, 2008'.
U.S. SMALL BUSINESS ADMINIS'I‘RATION
Mic l.ong`
twicech
orrtlris_L__ yo 2008.
SOORDEREDthisl ld¢yof
THEHONORABLE
UN]TED STATES DISTRIC!' JUDGE