GPB Automotive Portfolio, LP to Sell Prime Automotive for $880 Million, Which Generated $1.8 Billion in Annual Revenue in 2020; GPB Automotive’ s Future Remains Uncertain

According to SEC filings, GPB Automotive Portfolio LP entered into an agreement with Group 1 Automotive, Inc. on September 12, 2021, to sell Prime Automotive for $880 million, consisting of 30 car dealerships and three collision centers located in the Northeast of the United States.  According to a press release issued by Group 1 Automotive, Inc., the Prime Automotive dealerships generated $1.8 billion in annual revenues in 2020.

The future of GPB Automotive Portfolio, LP remains uncertain. Investors of GPB Automotive Portfolio LP are encouraged to act now and contact a securities arbitration law firm for a free consultation and review of their legal rights.

Iorio Altamirano LP is a securities arbitration law firm that represents GPB Automotive.  

As we wrote about last month, the sale of GPB Automotive Portfolio’s largest dealership group, Prime Automotive, has continued to raise speculation that GPB Automotive was running out of cash.   According to regulatory filings from earlier this year, GPB Automotive disclosed that it might sell dealerships to provide operational liquidity.

On December 31, 2018, GPB Automotive’ s portfolio consisted of 52 dealerships and 81 franchises.   By March 31, 2021, the GPB Automotive portfolio fell to 32 dealerships and 45 franchises.  Now, with the announced sale of 30 dealerships to Group 1 Automotive, Inc., along with the sale of two dealerships in April 2021, GPB Automotive Portfolio currently owns no car dealerships.

The latest news follows GPB Automotive’s regulatory filings in May 2021 that disclosed that there was substantial doubt that the business would survive, and July 2021 that disclosed that the Partnership was able to obtain a financing agreement with M&T Bank, but that the Partnership only had sufficient liquidity to meet its financial obligations through July 21, 2022.

The forecast remains foggy for limited partners of GPB Automotive, who have endured years of bad news:

  • 2018: GPB Automotive Portfolio, LP stopped paying distributions to limited partners, and regulators launched investigations against the general partner, GPB Capital Holdings, LLC.
  • June 2019: GPB Automotive reported significant losses.
  • July 2019: David Rosenberg, a principal of Prime Automotive Group in Massachusetts, which GPB Automotive purchased, accused GPB Capital of running a “Ponzi-like” scheme.
  • June 2020: The State of Massachusetts filed a fraud complaint against GPB Capital Holdings.
  • February 2021: The SEC charged parent company GPB Capital and three individuals with running a Ponzi-like scheme that raised over $1.7 billion from securities issued by GPB Capital in four of its funds, including GPB Automotive.   The SEC’s fraud case has been put on hold pending the outcome of related criminal fraud cases against GPB founder David Gentile and two others.

The cost for much of the legal defense is being paid for by Partnership, a punch in the gut to limited partners who have money tied up in the illiquid Partnership but have not received any distributions for three years.  According to public filings, if the legal reserves are insufficient to cover the actual costs of the extensive legal actions, GPA Automotive may seek to recoup distributions that have already been paid to investors.

Although GPB Automotive investors may be discouraged, they are not without options.

What can GPB Automotive investors do?

GPB Automotive investors should immediately contact a securities arbitration law firm to review their legal rights.

Investors who have purchased GPB Automotive through a broker or brokerage firm have successfully recovered investment losses by filing securities arbitration claims.

For example, last month, a FINRA arbitration panel in New York, New York, ruled in favor of a brokerage customer that invested in GPB Automotive Portfolio LP and GPB Waste Management LP at the recommendation of his financial advisor at Hightower Securities, LLC.

The arbitration panel ordered Hightower Securities, LLC to refund $163,201 to the customer in exchange for returning the limited partnership interests, essentially making the customer whole.  The customer had purchased the limited partnership interests for $170,000 and had previously received $6,799 from the investments as a return of capital.

Brokers and brokerage firms are obligated to make suitable recommendations in their customers’ best interests.  Among other things, the broker must have a reasonable basis to believe that a recommendation is suitable for a customer based on the particular customer’s investment profile.  In addition, the broker and firm must have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors.  FINRA has stated that “reasonable diligence” means that the firm’s and/or broker’s due diligence “must provide the firm or associated person with an understanding of the potential risks and rewards of the recommended security or strategy.”

Brokerage firms may have failed to conduct reasonable diligence into the GPB funds before selling the private placement offerings to their customers.   The firms’ compliance departments likely ignored or missed many red flags such as inflated revenue reports, fabricated profits, kickbacks, and investor funds being funneled into the pockets of GPB’s principals.

Iorio Altamirano LLP is investigating claims on behalf of defrauded investors who were victims in the GPB funds scheme. The GPB funds were marketed to independent broker-dealers and investment advisers who would, in turn, sell the GPB funds to their retail investors.

Investors that have purchased any of the following private placement investments issued by GPB Capital should contact securities arbitration law firm Iorio Altamirano LLP  for a free and confidential consultation and review of their legal rights:

  • GPB Holdings, LP / GPB Holdings Qualified, LP.
  • GPB Automotive Portfolio, LP.
  • GPB Holdings II, LP.
  • GPB Waste Management, LP.

If you lost money in the GPB funds, you might have a claim.

How to Recover GBP Investment Losses

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have lost money on the GPB  funds, contact securities arbitration lawyers August Iorio and Jorge Altamirano of Iorio Altamirano LLP at august@ia-law.comjorge@ia-law.com, or toll-free at (855) 430-4010 for a free and confidential consultation and review of your legal rights.

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