On April 14, 2022, GPB Automotive Portfolio, LP filed its Form 10-K Annual Report with the United States Securities and Exchange Commission. The filing has raised new concerns for GPB investors as GPB Automotive disclosed that it had commenced a plan to liquidate the Partnerships’ remaining assets and wind up the business, which is not expected to be complete until December 31, 2024.
In addition, GPB Capital continues to disclose that it, along with its former principals and representatives, are subject to numerous material litigation, which may take substantial time (several years) to resolve, and an unknown amount of outflow of cash from the Partnership to cover judgments, and legal costs.
Frustrating limited partnership investors, GPB is advancing funds to its principals and representatives, including David Gentile, for legal costs that they may incur to defend themselves in such disputes. Mr. Gentile has been criminally charged with securities fraud for allegedly running a Ponzi-like scheme.
As a result of the legal reserves and escrows, GPB Automotive has disclosed that distributions to Limited Partners may be delayed or withheld until such reserve is no longer needed or the escrow period expires. Worse, if the amounts of such reserves or escrows are insufficient, GPB Automotive has disclosed that Limited Partners themselves might have to return prior cash distributions to fund these liabilities.
New York securities arbitration law firm Iorio Altamirano LLP continues to investigate and evaluate potential claims for investors who have purchased GPB Automotive Portfolio, LP, GPB Holdings, LP, GPB Holdings II, LP, GPB Waste Management, LP, or GPB Cold Storage, LP.
GPB Capital investors are encouraged to contact Iorio Altamirano LLP for a free and confidential consultation and review their legal rights. Iorio Altamirano LLP has represented numerous GPB investors in recovering losses.
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GPB Automotive 10-K Filing (April 14, 2022)
GPB Automotive Portfolio, LP’s Annual Report for 2021 contains a wealth of disclosures that GPB investors should be aware of. The law firm of Iorio Altamirano LLP has combed through the lengthy filing and believes the following to be important disclosures:
- Despite completing the sale of nearly all of its revenue-generating assets for $880 million, GPB Automotive has only $535 million in total net assets in liquidation and no significant revenue-generating assets.
- GPB Automotive has commenced a plan to liquidate the Partnership’s remaining net assets and wind up the Partnership.
- The liquidation is not expected to be completed until December 31, 2024.
- As part of the United States Attorneys’ Office criminal proceedings against Mr. Gentile, Mr. Schneider, and Mr. Lash, which alleges conspiracy to commit securities fraud, as well as other charges, the USAO intends to seek criminal forfeiture.
- GPB Automotive may not be able to pay liquidating distributions to its limited partners at the times and in the amounts expected. The Partnership does not know the timing or amount of any liquidating distributions, as uncertainties exist as to the ultimate amount of its expenses associated with completing our monetization strategy, its liabilities, its operating costs, and amounts to be set aside for claims, obligations, and expenses during the liquidation and winding-up process, and the related timing to complete such transactions.
- If GPB Automotive fails to retain sufficient funds to pay the liabilities actually owed to its creditors, each Limited Partner receiving liquidating distributions could be liable for payment to its creditors for such Limited Partners’ pro-rata share of any shortfall, up to the amount actually distributed to such Limited Partner in connection with the dissolution.
- Limited Partners may not receive distributions to return their invested capital fully.
- GPB Automotive and GPB Capital are involved in material litigation arising from the Partnership’s operations, and they are subject to litigation risks. Resolving litigation disputes can be costly and time-consuming. As a result of outstanding litigation, the Partnership may incur significant legal fees.
- The Partnership has incurred expenses in advancing funds to the General Partner to pay for its attorney’s fees and costs in that lawsuit and will continue to incur expenses in that regard.
- In the event settlement discussions regarding class action lawsuits or any pending regulatory investigations are unsuccessful, any liability may require an outflow of cash from the Partnership. The amount and timing of any such outflow of cash are not estimable at this time.
- GPB anticipates that resolving its legal matters will likely take substantial time; some or all of the pending matters may not be resolved for several years.
- GPB Automotive is advancing funds to officers, directors, and representatives of the dealerships, as well as GPB, its principals, and representatives, for any reasonable costs they may incur in connection with defending themselves in such disputes as required by various agreements or governing law. This advancement of funds does not cover any potential future outcomes or settlements that result from these disputes.
- GPB Automotive established reserves or escrows for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. The actual costs of resolving legal actions may be substantially higher or lower than the amounts reserved or placed in escrow for those actions. Distributions may be delayed or withheld until such reserves are no longer needed or the escrow period expires. If liabilities exceed the amounts reserved or placed in escrow, Limited Partners may need to fund the difference by refunding some or all distributions previously received.
- With respect to all significant litigation and regulatory matters facing GPB Automotive, GPB Capital, and the former dealerships, GPB Automotive has considered the likelihood of an adverse outcome. It is possible that GPB Automotive could incur losses about these matters that may have a material adverse effect on its operational results, financial condition, or liquidity in any future reporting period. GPB Automotive knows that GPB Capital, the general partner, is currently paying legal costs associated with these actions for itself and certain indemnified parties. The Partnership expects to provide partial reimbursement to the General Partner as required by various agreements or governing law, but the amount is not reasonably estimable at this time.
- GPB Automotive has identified material weaknesses in its internal controls. GPB Automotive will expend significant financial and other resources to comply with the requirements of being a public entity. These requirements may place a strain on our systems and resources. GPB Automotive expects to incur significant additional annual expenses related to its public company status and, among other things, to directors’ and officers’ liability insurance, director fees, reporting requirements of the SEC, and additional administrative expenses to GPB or affiliated entities to compensate them for hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses.
- Expenses related to GPB and Highline are significant. Despite having almost no revenue-generating assets, GPB Automotive disclosed that it needs to make substantial profits to avoid depletion of its assets and provide a return to our Limited Partners.
What Can GPB Investors Do?
GPB Capital investors should immediately contact a securities arbitration law firm to review their legal rights.
Investors who have purchased GPB Automotive, GPB Holdings, GPB Holdings II, or GPB Waste Management through a broker or brokerage firm have successfully recovered investment losses by filing securities arbitration claims.
Iorio Altamirano LLP is a national securities arbitration law firm based in New York, NY. The law firm pursues FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.
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 to recover your losses. We generally represent clients on a contingency fee basis. If we do not obtain a recovery, you do not owe us a legal fee.