Friday December 16 at 1pm doesn’t have the resonance of High Noon but a court filing1 suggests it may be the moment for a Special Set Evidentiary Hearing to determine whether a Receiver will be appointed for INTO USF Inc2 (INTO)3. It is termed, somewhat ominously, a JAWS4 hearing in the Docket Entries for the case but it’s not clear who is “gonna need a bigger boat”. Churchill may have said that “meeting jaw to jaw is better than war” but in business terms this encounter may defy that maxim.
As always, this blog attempts to inform readers but notes that no opinion is offered on the merits of the case or the assertions by either side. For keen readers of detail, the paperwork in the case is filed with The Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida Circuit Civil Division and is publicly available. The Consolidated Lead Case is CASE NO.: 22-CA-006001, Div. L, with a secondary case as CASE NO.: 22-CA-006726, Div. L.
These are complex matters and I will be happy to receive authoritative factual corrections and make any necessary amendments.
WHAT’S IT ALL ABOUT?
The Hearing follows a Motion and Incorporated Memorandum of Law from USF Financing Corporation (USFFC), on 3 October 2022, for appointment of a receiver5. The fundamental request is that this is “…to (1) take control of the assets of the Company and (2) release what should be state auxiliary funds only for the purpose of funding the teach-out, together with such other and further relief as this Court deems just and proper.”
INTO’s response on 24 October6 urged the court to reject the request with the Argument under two main headings – that “the Joint Venture Is Not Engaging in Self-Dealing Or Waste” and that “the USF Parties’ Arguments Are Baseless.” It also notes “Appointing a receiver is a rare and extraordinary remedy.” Plaza v. Plaza, 78 So. 3d 5, 6(Fla. Dist. Ct. App. 2011).”
USF made a reply to this on 31 October7 noting that “The USF parties seek to protect for the teach-out $7.5 million of payments made by international students and sponsoring foreign governments for academic instruction and student housing provided by USF.” They assert that, “At no point in their Response do the INTO Entities indicate they will forward those funds to USF to be used for their intended purpose.”
THIS IS ROUND TWO
Last time the parties were in court in relation to the case was on 19 August 2022 when an Evidentiary Hearing considered an Emergency Motion from INTO for a Temporary Injunction to Maintain the Status Quo. There was “…live testimony by both parties” and the Clerk’s notes8 indicate that John Sykes, Co-founder and Deputy CEO of INTO University Partnerships, Kiki Caruson, Vice President of USF World and Fell L. Stubbs, Treasurer of University of South Florida and Executive Director of the USF Financing Corporation were in court as witnesses.
An order denying the Motion was made on 31 August9 with none of the four key requirements for preliminary injunctive release having been met. However, it was noted that “..this ruling is not dispositive or determinative of the merits of the main issues in the case.”
THE BIGGER PICTURE
There are over 100 pages of documentation, including original contracts, in the three documents related to appointing a receiver. The dispute is part of a wider case centering on USFFC seeking a Declaratory Judgement on 21 April 2022 stating it “…provided its notice of termination of the University Services Agreement and the Direct Admit Marketing Services Agreement….. Once USF terminated the University Services Agreement with the Company, this termination automatically terminated the Stockholders Agreement, which now requires the parties to dissolve and wind-up the Company.”10
INTO’s response of 20 September noted that between February and April 2022 they understood that USF were “..exploring the possibility of revising by mutual consent the original terms of the partnership” but that USF then “…improperly sought to terminate their contracts with Plaintiffs and dissolve INTO USF, Inc.” They also state that they “..have at all times vigorously disputed USFFC and USF’s assertion that the Joint Venture was insolvent. Not only is this conduct in bad faith and in clear breach of the parties’ contracts, but it represents a transparent attempt to wrongfully appropriate the business of a company that was supposed to be its partner and that it knows has substantial value.”11
Apparently, “The parties have engaged in both forms of alternative dispute resolution mechanisms, but were unsuccessful in reaching a resolution of their dispute.”12
On the legal side USSFC are represented by Buchanan Ingersoll and Rooney PC while INTO have Sivyer Barlow Watson & Haughey, P.A., Bush Ross, P.A., and Susman Godfrey L.L.P. The latter’s website makes the claim that they are “..America’s premier litigation boutique” so the stakes seem high.
Notes
All filing references relate to documentation filed with The Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida Circuit Civil Division.
- Filing #159856710, E-Filed 10/24/2022. Jaws Confirmation No. 12J – 349103917354.
- INTO USF Inc.,is described in its Marketing and Recruitment Services Agreement with INTO University Partnerships Limited as “offering a range of academic preparatory programs and English language courses to international students which, when successfully completed, enable qualified international students the ability to progress to undergraduate and graduate degree programs at the University (collectively, the “INTO USF Programs”) Filing # 153460265 E-Filed 07/15/2022 Exhibit B
- For simplicity the term INTO is used for submissions by defendants, INTO USF LP, a Delaware limited partnership, and INTO USF, INC., a Florida corporation, in the Consolidated Lead Case CASE NO.: 22-CA-006001, Div. L where USF Financing Corporation (USFFC), a Florida not-for-profit corporation, is the Plaintiff (Filing # 156524107 E-Filed 08/31/2022).
- JAWS is the acronym for the Judicial Automated Workflow System for the Thirteenth Judicial Circuit System of Florida.
- Filing # 158504942, E-Filed 10/03/2022
- Filing # 159869006 E-Filed 10/24/2022
- Filing # 160306990 E-Filed 10/31/2022
- CDOCboa89b3b594b23_1661607751
- CDOCbo8ffb49b6e49c_1662035965
- Filing # 153460265 E-Filed 07/15/2022
- Filing # 157809124 E-Filed 09/20/2022
- Filing # 153460265 E-Filed 07/15/2022
Image by Dmitry Abramov from Pixabay