Middle-market lender Monroe Capital has dismissed a lawsuit against a former employee, Warren Woo, saying the two sides have reached a “mutually satisfactory settlement arrangement.”
In June, Monroe terminated Woo, a managing director, for allegedly stealing proprietary information and siphoning-off trade secrets to a new firm, Breakaway Capital.
“Upon further investigation, it is clear that Warren’s actions were not improper,” Monroe Capital CEO Ted Koenig said in a statement issued by Breakaway Capital today.
Woo will remain a limited partner of Monroe Capital. As a result, “I look forward to remaining economically aligned with Monroe going forward,” Woo said in a statement.
Contacted by LCD, Koenig gave no further explanation, and said he could not comment on a former employee. Woo did not respond to an email seeking comment.
In the statement, Breakaway Capital said it was focused on companies generating up to $5 million in annual EBITDA. The firm said it provides senior debt, subordinated and mezzanine debt, unitranche structures, and equity to companies for buyouts, acquisitions, recapitalizations, restructurings and growth capital, for sponsored and non-sponsored transactions.
A complaint filed on June 19 by Monroe Capital with the Circuit Court of Cook County, Ill., alleged that for more than 18 months, Woo forwarded hundreds of emails to another email account at Breakaway Capital. He then deleted the forwarded emails from his sent-items folder at Monroe Capital to avoid detection.
Some of the emails instructed recipients to communicate with Woo in the future at Breakaway Capital only.
“Woo and his new company, acting in concert with his new partner and Breakaway Capital co-founder, Michael Connolly, arrogated to themselves critical business opportunities which belonged to Monroe Capital and which Woo had a clear duty to consider the exploit for Monroe Capital and not for his new company and new partners,” the complaint said.
Included in the 308 emails Woo forwarded, as well as 157 attachments, were new business prospects, individual deal structures and pricing memos, internal underwriting analysis, and third-party analysis that Monroe Capital paid for as part of new business pitches.
Monroe Capital uncovered the scheme after the firm received an SEC subpoena requesting information about Breakaway Capital. As a result of the subpoena, Monroe looked into Woo’s email.
“The investigation revealed that not only did Woo improperly transfer confidential and proprietary company and customer information and trade secrets, but that he actively intends to use this information to compete with Monroe Capital by taking deal source leads generated by Monroe Capital and made, or attempted to make, them his own for his benefit and that of Breakaway Capital.”
“Monroe Capital has suffered irreparable harm as a result of Woo’s unlawful conduct,” the complaint said.
Woo and Michael Connolly founded Breakaway Capital as a limited partnership.
Breakaway Capital, based in Los Angeles, is a private investment firm with $50 million of committed capital, seeking debt and structured equity investments in small and middle-market businesses across a variety of industries, the company’s website said. The company was formed in March 2014, the complaint said.
Chicago-based Monroe Capital, established in 2004, provides debt and equity co-investments to middle-market companies in North America, including unitranche financings, acquisition facilities, mezzanine debt and second-lien loans. – Abby Latour
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