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$42 Million Dealership Sales Dispute

February 6, 2018 1 Comment

GPB Capital Holdings, a current leading seller of illiquid, high-commission alternative investments through independent broker-dealers, is embroiled in a dispute with a former business partner who allegedly backed out on a group of dealership sales valued at $40 million.

Per an InvestmentNews report, in July 2017, GPB and related investment funds sued Patrick Dibre, who owned several auto dealership in the New York metropolitan area. In 2013, Dibre “held himself out to” the firm as someone who could help build their dealership business, according to a complaint filed in the New York Supreme Court in Nassau County.

Between December 2013 and April 2015, GPB advanced Dibre nearly $42 million for dealerships that he ultimately did not deliver, according to the lawsuit. In a footnote, GPB noted that the process for seeking an automaker’s approval of a dealership sale is initiated by the seller. Allegedly, Dibre did not provide the required notices to start the sales process for five dealerships.

“Rather, Dibre informed automobile manufacturers that they should withhold their approval of GPB owning and operating dealers because of untrue alleged malefactions and malfeasance on the part of GPB,” according to the complaint. GBP further alleged that Dibre is “negotiating for the sale to an investment fund” of the same dealerships.

The GPB lawsuit is ongoing; in January, New York Supreme Court Judge Vito DeStefano dismissed two claims leveled against Dibre, but allowed others (including fraud, breach of contract, and others).

Ross Kaltz, an attorney for Dibre, did not respond for comment.

James Presitiano, an attorney for GPB, said that he was “hopeful” the matter would be resolved this year.

Presitiano confirmed that GPB sales in 2017 were between $600 million and $800 million, raised from investors through “sales of reps at independent contractor broker-dealers.” On its website, it says the company raised $1.3 billion and owns over 100 companies in various portfolios.

“I think that’s an accurate ballpark [figure],” Presitiano said.

It’s unclear which broker-dealers are selling GPB’s deals; private placements are expensive. The GPB Automotive Portfolio raised nearly $370 million from over 3,800 investors and paid out $43.4 million (or 11.75 percent) in sales commissions, according to a filing with the Securities and Exchange Commission.

Illiquid alternative investments sales have suffered over the past few years due to the Department of Labor’s fiduciary rule, causing broker-dealers to cut commissions due to conflict of interest rules.

According to Susan Kelly, a director in investment management and research at Commonwealth Financial Network, GPB is marketing its partnerships as private equity, but there is an emphasis on immediate earnings.

“It’s a hybrid,” she said. “It’s a private-equity type fund that is looking for businesses with cash flow.”

About the Author:

Dave Martinson is a broadcast journalist for DrivingSalesNews. He has a background as a TV News Reporter, Anchor and Producer. He has also worked in Digital Marketing and Human Resources. He received his bachelor’s degree in Communication from Brigham Young University – Idaho. He’s married and originally from the state of Washington. He’s a huge football fan and enjoys the outdoors.

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