WENDY BEETLESTONE, District Judge.
Before this Court is the Complaint by the United States of America, on behalf of the United States Small Business Administration ("SBA"), for a permanent injunction, and the appointment of the SBA as Permanent Receiver for Murex Investments I, L.P. The Court, being fully advised in the merits, and based upon the consent of the parties, believes this relief should be granted:
1. Pursuant to the provisions of Section 363 of the Small Business Investment Act, this Court shall take exclusive jurisdiction of Murex Investments I, L.P. ("Murex"), and all of its assets, wherever located, and the United States Small Business Administration ("SBA"), is hereby appointed receiver ("the Receiver") of Murex to serve without bond until further order of this Court. The Receiver is appointed for the purpose of administering, marshaling and, if necessary, liquidating all of Murex's assets to satisfy the claims of creditors therefrom in the order of priority as determined by this Court.
2. The Receiver shall have all powers, authorities, rights and privileges heretofore possessed by the managers, and officers of Murex under applicable state and federal law and by the Partnership Agreement of said partnership, in addition to all powers and authority conferred upon the Receiver by the provisions of Section 363 of the Small Business Investment Act 15 U.S.C. §687c. The general partner, managers, employees and agents of Murex are hereby divested of all authority to act on behalf of Murex. Such persons shall have no authority with respect to Murex's operations or assets, except as may hereafter be expressly granted by the Receiver. The Receiver shall assume and control the operation of Murex and shall pursue and preserve all of its claims.
3. The past and/or present officers, agents, managers, accountants, attorneys and employees of Murex, as well as all those acting in their place, are hereby ordered and directed to turn over to the Receiver forthwith all books, records, documents, accounts and all other instruments and papers of said partnership and all other assets and property of the company, whether real or personal. Murex shall furnish a written statement within five (5) days after the entry of this Order, listing the identity, location and estimated value of all assets of Murex as well as the names, addresses and amounts of claims of all known creditors of Murex. All persons having control, custody or possession of any assets or property of Murex are hereby directed to turn such property over to the Receiver.
4. The Receiver shall promptly give notice of its appointment to all known general partners, agents, managers, employees, creditors, debtors and agents of Murex. All persons and entities owing any obligations or debts to Murex shall, until further ordered by this Court, pay all such obligations in accordance with the terms thereof to the Receiver, and its receipt for such payments shall have the same force and effect as if Murex had received such payments.
5. The Receiver is hereby authorized to open such Receiver's bank accounts, at banking or other financial institutions, to extend credit on behalf of Murex, to utilize SBA personnel, and to employ such other personnel as necessary to effectuate the operation of the receivership including, but not limited to, attorneys and accountants, and is further authorized to expend receivership funds to compensate such personnel in such amounts and upon such terms as the Receiver shall deem reasonable in light of the usual fees and billing practices and procedures of such personnel. The Receiver is not required to obtain Court approval prior to the disbursement of receivership funds for payments to personnel employed by the Receiver or payments for expenses incidental to administration of the Receivership. In addition, the Receiver is authorized to reimburse the SBA or its employees for travel expenses incurred by SBA personnel in the establishment and administration of the receivership. The Receiver may, without further order of this Court, transfer, compromise, or otherwise dispose of any claim or asset, other than real estate, which would result in net proceeds to the Receiver.
6. Murex's past and/or present general partners, agents, managers, employees, and other appropriate persons (including, without limitation, the defendant's portfolio of small business concerns and banks or other financial institutions doing business with defendant and/or defendant's portfolio of small business concerns) shall answer under oath, pursuant to a Receiver's Notice or Subpoena, to the Receiver, all questions which it may put to them regarding the business of said partnership, or any other matter relevant to the operation or administration of the receivership or the collection of funds due to Murex. In the event that the Receiver deems it necessary to require the appearance of the aforementioned persons, the production of documents, information, or any other form of discovery concerning the assets, property or business assets of Murex or any other matter relevant to the operation or administration of the Receivership or the collection of funds due to Murex, the Receiver shall direct notice for any such appearance by certified mail, and said persons shall appear and give answer to the Receiver, produce documents or submit to any other form of discovery in accordance with the Federal Rules of Civil Procedure.
7. The parties or prospective parties to any and all civil legal proceedings wherever located, including, but not limited to arbitration proceedings, bankruptcy or foreclosure actions, default proceedings, or any other proceedings involving (i) Murex (ii) any assets of Murex, (iii) the Receiver for Murex, and (iv) Murex's present or past general partners, to the extent said civil legal proceedings involve any action taken by them while acting in their official capacity for Murex, are enjoined from taking any action, including discovery, commencing or continuing any legal proceeding of any nature without further order of this Court.
8. All civil legal proceedings wherever located, including arbitration proceedings, foreclosure activities, bankruptcy actions, or default proceedings, but excluding the instant proceeding, involving (i) Murex, (ii) any of assets of Murex, (iii) the Receiver for Murex or (iv) Murex's present or past managers to the extent said civil legal proceedings involve any action taken in their official capacity for Murex, are stayed in their entirety, and all Courts having any jurisdiction thereof are enjoined from taking or permitting any action in such proceedings until further Order of this Court.
9. Further, as to a cause of action accrued or accruing in favor of Murex against a third person or party, any applicable statute of limitation is tolled during the period in which this injunction against commencement of legal proceedings is in effect as to that cause of action.
10. Murex and its past and/or present officers, managers, agents, employees and other persons acting in concert or participation therewith be, and they hereby are, enjoined from either directly or indirectly taking any actions or causing any such action to be taken which would dissipate the assets and property of Murex to the detriment of the Receiver appointed in this cause, including but not limited to destruction of company records, or which would violate the Small Business Investment Act of 1958, as amended, (the "SBIA"), 15 U.S.C. Section 661
11. The Receiver is authorized to borrow on behalf of Murex, from the SBA, up to $1,000,000, and is authorized to cause Murex to issue Receiver's Certificates of Indebtedness in the principal amounts of the sums borrowed, which certificates will bear interest at or about 10 percent per annum and will have a maturity date no later than 18 months after the date of issue. Said Receiver's Certificates of Indebtedness shall have priority over all other debts and obligations of Murex, excluding administrative expenses of the Receivership, whether presently existing or hereinafter incurred, including without limitation any claims of partners of Murex.
12. This Court determines and adjudicates that Murex has violated the SBIA and the Regulations, as alleged in the Complaint filed in this matter.
13. The United States Small Business Administration is further entitled to a judgment against Murex in the total sum of $2,588,850.54, consisting of $2,582,703.93 in principal plus accrued interest as of June 23, 2015 of $6,146.61 with a per diem rate of $384.16 for each day thereafter through the date of entry of this Order (as reduced by previous principal and interest payments received by SBA), plus post judgment interest pursuant to 28 U.S.C. § 1961 as of the date of entry of this Order.
COMES NOW Plaintiff, the United States of America, on behalf of its agency, the United States Small Business Administration, and for its cause of action states as follows:
1. This is a civil action brought by the United States of America on behalf of its agency, the United States Small Business Administration (hereinafter, "SBA," "Agency" or "Plaintiff"), whose central office is located at 409 Third Street, S.W., Washington, D.C., 20416.
2. Jurisdiction is conferred on this Court by virtue of the Small Business Investment Act of 1958, as amended (hereinafter, the "Act"), Sections 363 and 364; and 15 U.S.C. §§ 6891 and 689m, and 28 U.S.C. § 1345.
3. Defendant, Murex Investments I, L.P. (hereinafter, "Murex" or "Defendant") is a Delaware limited partnership that was designated with final approval by SBA as a New Markets Venture Capital Company (hereinafter "NMVCC") in 2003. Murex was assigned NMVCC number 03/83-0003. Murex maintains its principal office and/or principal place of business at 470 Wissahickon Avenue, Suite 126, Philadelphia, PA 19144. Venue is therefore proper under Section 363 of the Act, 15 U.S.C. § 689, and 28 U.S.C. § 1391(b).
4. The purposes of the Act and the New Markets Venture Capital Program are to improve and stimulate the national economy, and small business in particular, by stimulating and supplementing the flow of private equity capital and long-term loan funds which small businesses need for sound financing of their operations and growth. 15 U.S.C.§ 661; and to further economic development and the creation of wealth and job opportunities in low-income geographic areas and among individuals living in such areas by encouraging developmental venture capital investments in smaller enterprises primarily located in such areas. 15 U.S.C. §689a.
5. Congress authorized the SBA to carry out the provisions of the Act and to prescribe regulations governing the operations of NMVCCs. SBA duly promulgated such regulations which are set forth at Title 13 of the Code of Federal Regulations, Part 108 (hereinafter, the "Regulations").
6. Murex is a limited liability company organized solely for the purpose of performing the functions and conducting the activities contemplated under the Act and Regulations. SBA enters into participation agreements with NMVCCs and provides financing for them to accomplish the purposes of the Act.
7. SBA is authorized to provide Leverage to NMVCCs through the guarantee of debentures (hereinafter, "Debentures") issued by NMVCCs. 15 U.S.C. § 689d.
8. Leverage provided to an NMVCC in the form of Debentures is subject to the Regulations, including but not limited to the provisions of 13 C.F.R. §§ 108.1810-1840. Section 108.1830 of the Regulations states that a Licensee has a condition of capital impairment if its capital impairment percentage exceeds 70% percent.
9. If an NMVCC violates, or fails to comply with, any of the provisions of the Act or Regulations, all of its rights, privileges, and franchises may be forfeited and the company may be declared dissolved. 15 U.S.C. §689m.
10. Section 363 of the Act and Section 108.1810(g)(ii) provide that if SBA determines that an NMVCC has engaged, or is about to engage, in any acts or practices which constitute, or will constitute, a violation of the Act or Regulations, the SBA may seek, from the appropriate United States District Court, an order enjoining such act or practices, and upon a showing by the SBA that such NMVCC has engaged, or is about to engage, in any such act or practices, a permanent or temporary injunction, restraining order, or other order, shall be granted without bond. In addition, the Court is authorized to appoint SBA to act as receiver for such NMVCC. 15 U.S.C. § 6891.
11. Murex was approved and designated by SBA as an NMVCC and entered into a participation agreement with SBA signed in 2003. Murex was assigned NMVCC number 03/83-0003, solely to do business under the provisions of the Act and regulations promulgated thereunder.
12. Murex Investments, LLC is the general partner of Murex.
13. Murex's Operating Agreement, submitted to SBA by Murex, expressly provides that Murex is being organized solely for the purpose of operating as an NMVCC under the Act and that the operations of the partnership and the actions taken by the partnership and the partners shall be conducted in compliance with the Act.
14. In accordance with Section 355 of the Act, 15 U.S.C. §689d, SBA provided Leverage to Murex through the guarantee of Debentures with a face value totaling $8,250,000 of which $3.4 million remains outstanding.
15. Compliance with the terms of the Leverage provided by SBA required that Murex not have a condition of Capital Impairment, as that term is defined under the Regulations, 13 C.F.R. § 108.1830, which provides that an NMVCC such as Murex has a condition of Capital Impairment if its Capital Impairment percentage exceeds seventy percent (70%).
16. SBA determined that Murex had a condition of Capital Impairment as its Capital Impairment percentage exceeded 70%. By correspondence dated February 19, 2015, (the "Notice of Violation"), SBA informed Murex that it had a condition of Capital Impairment in violation of 13 C.F.R. § 108.1830 of the Regulations, and pursuant to Section 108.1810(f)(5) of the Regulations, Murex was in default with an opportunity to cure its impairment within 15 days of the date of that letter.
17. Murex waived its opportunity to cure by correspondence dated February 25, 2015.
18. Murex's condition of Capital Impairment constitutes non-compliance with the terms of its Leverage under 13 C.F.R. § 108.1830(a) and is a violation of and an event of default under the Regulations, 13 C.F.R. § 108.1810(f)(5). These continuing violations of the Regulations and Act entitle SBA to the remedies thereunder.
19. Section 364(b) of the Act, 15 U.S.C. §689m, provides that upon determination and adjudication of noncompliance or violation of the Act or the Regulations, all of the rights, privileges and franchises of an NMVCC may be forfeited and the NMVCC may be declared dissolved.
20. Section 363 of the Act, 15 U.S.C. § 6891, provides that, whenever in the judgment of SBA, an NMVCC, or any other person, has engaged in or is about to engage in any acts or practices which constitute or will constitute a violation of the Act or of any rule or regulation under this Act, or of any order issued under the Act, then SBA may make application to the proper district court of the United States or a court subject to the jurisdiction of the United States for an order enjoining such acts or practices, or for an order enforcing compliance with such provision, rule, regulation, or order. Moreover, such courts shall have jurisdiction of such actions, and upon a showing that such NMVCC or other person has engaged or is about to engage in such acts or practices, a permanent or temporary injunction, restraining order, or other order, shall be granted without bond. The Court may also appoint SBA to act as, receiver for such NMVCC.
21. Paragraphs 1 through 20 are incorporated herein by reference.
22. Murex has an uncured condition of Capital Impairment as that term is defined under the Regulations, 13 C.F.R. § 108.1830(b). That section provides that an NMVCC such as Defendant has a condition of Capital Impairment if its Capital Impairment percentage exceeds seventy percent (70%).
23. SBA has determined, and Murex does not dispute, that its Capital Impairment is in excess of 70%.
24. SBA has determined that Murex is not in compliance with its terms of Leverage due to its uncured condition of Capital Impairment.
25. As a consequence of the failure to cure the Capital Impairment, by letter dated March 6, 2015, SBA accelerated the amount due under the Debentures and gave Murex fifteen (15) days to cure its condition of Capital Impairment.
26. Murex has failed to cure its Capital Impairment and SBA has determined that Murex is in violation of the Regulations and in default under its Debentures.
27. As a consequence of Murex's continuing violation of the Regulations, SBA is entitled to the injunctive relief provided under the Act, including the appointment of SBA as Receiver of Murex, and Murex has signed a consent judgment and order agreeing to the relief requested by SBA.
WHEREFORE, Plaintiff prays as follows:
A. That injunctive relief, both preliminary and permanent in nature, be granted restraining Murex, its partners, managers, officers, agents, employees and other persons acting in concert or participation therewith from: (1) making any disbursements of Murex's funds; (2) using, investing, conveying, disposing, executing or encumbering in any fashion any or all funds or assets of Murex, wherever located; or (3) further violating the Act or the Regulations promulgated thereunder;
B. That this Court determines and adjudicates Murex's noncompliance with the requirements of the NMVCC participation agreement and Debentures and violation of the Act and the Regulations promulgated thereunder;
C. That this Court take exclusive jurisdiction of Murex, and all of its assets, wherever located and appoint SBA as permanent receiver of Murex for the purpose of liquidating all of Murex's assets and satisfying the claims of its legitimate creditors therefrom in the order of priority as determined by this Court, and pursuing causes of action available to Murex, as appropriate.
D. That this Court orders that Murex shall no longer be able to operate pursuant to the participation agreement with SBA as an NMVCC upon the wind-up and conclusion of the receivership thereof.
E. That this Court enter the Consent Judgment in the amount of $2,588,850.54, consisting of $2,582,703.93 in principal plus accrued interest as of June 23, 2015 of $6,146.61 with a per diem rate of $384.16 for each day thereafter through the date of entry of this Order (as reduced by previous principal and interest payments received by SBA), plus post judgment interest pursuant to 28 U.S.C. § 1961 as of the date of entry of this Order.
F. That this Court grants such other and further relief as may be deemed just and proper.
