GPB News

GPB Capital SEC Monitor Update as of November 2021

In November 2021, the Court-appointed monitor submitted its quarterly report. According to its report, since the appointment of the monitor in February 2021, the two main areas of focus have included: (1) Financial Reporting and (2) GPB Investments.

For Financial Reporting, the SEC Monitor stated as follows:

• On May 14, 2021, the Form 10 for Automotive Portfolio LP (one of the two largest Limited Partnerships) was initially filed. The filing was last amended on September 9, 2021.
• On August 26, 2021, the first 10-Q for Automotive Portfolio LP was filed.
• Additional audits are either ongoing or largely completed with further public filings expected in 4Q21.
• GPB has replaced both its valuation service provider and tax services provider with reputable and independent firms.

For GPB Investments, the SEC Monitor stated as follows:

• On September 13, 2021, GPB announced the sale of Prime Automotive Group and substantially all of its auto related assets to Group 1 Automotive. The sale is expected to close in November 2021.
• Under supervision of the Monitor, GPB continues to market several of its assets for sale. Several Limited Partnerships are expected to enter wind-down following the exit of investments within the respective Limited Partnerships.

What is the Court Appointed Monitor Authorized to Do?

The Monitor in the SEC action against GPB is authorized with the following general powers and duties:

1. Review the finances and operations of GPB, Highline, the GPB Funds, or the Portfolio Companies. The Monitor will negotiate a protocol with GPB for the review of this information;
2. Review historical corporate transactions by GPB and/or Highline, the GPB Funds or the Portfolio Companies, to the extent covered by GPB’s forthcoming audited financial statements and any restatements covered therein, for the purposes of executing paragraph 6, above, and consistent with paragraph 19, below. The Monitor will not interfere with ongoing audits. The Monitor will negotiate a protocol with GPB for the review of this information;
3. Review historical compensation of all executive officers or affiliates of GPB, Highline, the GPB Funds, or the Portfolio Companies;
4. Review the retention of all consultants currently retained by GPB, Highline, the GPB Funds, or the Portfolio Companies;
5. Review audited financial statements of GPB, Highline, the GPB Funds, or the Portfolio Companies, which GPB will promptly deliver to the Monitor upon completion;
6. Review the minutes of all meetings of all boards of directors of GPB, Highline, the GPB Funds, or the Portfolio Companies;
7. Review the status of all litigation involving GPB, Highline, the GPB Funds, or the Portfolio Companies.
8. Review any commencement or settlement of any litigation involving GPB, Highline, or the GPB Funds, and any commencement or settlement of any litigation outside of the ordinary course of business involving any of the Portfolio Companies;
9. Review any material changes to material leases or real estate holdings, including the signing of any new leases, the termination of leases, material changes to lease terms, or the purchase or sale of any material property by GPB, Highline, the GPB Funds, or the Portfolio Companies. If the material change involves a GPB, Highline, or Portfolio Company related party or affiliate, the Monitor shall have the power to approve or disapprove of the material change;
10. Review insurance policies covering GPB, Highline, the GPB Funds, or the Portfolio Companies as well as affiliates, officers, and directors of such entities; and
11. Review promptly and approve any investor-wide communications intended to be sent by GPB to investors in the GPB Funds

How Long Will the Monitor Be in Place?

According to the Court’s Amended Order dated in April 2021, the Monitor for the SEC action against GPB will remain in place until terminated by the Court.

What Assets, Entities and Funds is the Monitor Reviewing?

Per the Court’s Amended Order dated in April 2021, GPB shall grant the Monitor access to all non-privileged books, records, and account statements for the GPB Funds and its Portfolio Companies.

For instance, the GPB Funds that GPB shall grant access to the Monitor includes as follows:

• Armada Waste Management, LP (fka GPB Waste Management, LP)
• GPB Automotive Income Fund, Ltd.
• GPB Automotive Portfolio, LP
• GPB Cold Storage, LP
• GPB Holdings, LP
• GPB Holdings Qualified
• LP GPB Holdings II, L
• GPB Holdings III, LP
• GPB NYC Development, LP