More than 100 liens have been filed against Menomonee Falls, Wis.-based Wellington Equipment Corp., a formerRER 100 company, according to a report in the Milwaukee Journal Sentinel based on Wisconsin Department of Financial Institutions records. The liens were primarily filed by banks and equipment manufacturers, the Journal Sentinel reported.
Wellington Equipment is just one of a number of businesses operated by Wellington Management Corp. that are running into serious debt problems. Orix Real Estate Capital Markets LLC filed suit against Wellington accusing it of defaulting on its mortgage loan. According to Orix, Wellington owes it almost $6 million on a golf course that cost $5 million to develop. A judge last week put the Country Club of Wisconsin in receivership.
Many of the investments Wellington sells to the public are set up so Wellington and its subsidiaries have the potential to make money, whether or not investors do, through various fees. The deals contain numerous related-party transactions, and use a lot of debt, according to regulator records. The investments don't trade easily and aren't priced on a daily basis, the newspaper reports, thus making it difficult for investors to gauge their performance until the end of the investment period, and difficult for them to sell. The offering documents for the partnerships allow at least three Wellington companies to receive fees in the form of commissions, recurring management and administrative charges and cash distribution agreements, pointing to possible conflicts of interest that could arise out of relationships between Wellington Management, its affiliates and company equipment managers.
