Frbsf Default Notice to Benworth (Feb. 27, 2024) — OTO Analytics v. Benworth (N.D. Cal. No. 3:24-cv-03975)

Record facts

U.S. District Court for the District of Puerto Rico · No. 3:23-cv-01034-GMM · Doc. 127-6 · 2024-07-10 · Docket on CourtListener

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INTERNAL FR/OFFICIAL USE // EXTERNAL 
February 27, 2024 
VIA EMAIL 
Bernardo E. Navarro 
President 
Benworth Capital Partners LLC 
bnavarro@benworthcapital.com 
Re: 
Paycheck Protection Program Liquidity Facility 
Dear Mr. Navarro, 
As you know, the Federal Reserve Bank of San Francisco (the “Reserve Bank”) has made 
advances (“Advances”) to Benworth Capital Partners LLC (“Benworth” or the “Borrower”) under 
the Paycheck Protection Program Liquidity Facility (the “PPPLF”) pursuant to the Paycheck 
Protection Program Liquidity Facility Letter of Agreement dated May 4, 2020, January 14, 2021 
and January 30, 2023 (each, a “Letter of Agreement” and collectively, the “Letters of Agreement”) 
and also the Federal Reserve Banks’ Operating Circular No. 10 (“Operating Circular” and, together 
with the Letters of Agreement, the “PPPLF Agreement”). Except as provided in this letter, terms 
defined in the PPPLF Agreement have the same meaning when used in this letter. 
We write with respect to various defaults that have occurred under the PPPLF Agreement. 
The Reserve Bank reserves all of its rights and remedies with respect to all such defaults, and 
generally under the PPPLF Agreement. 
Various facts and circumstances have occurred that have caused the Reserve Bank to 
conclude that Events of Default, as defined in the PPPLF Agreement, have occurred. Among other 
things, Benworth informed the Reserve Bank that the U.S. Small Business Administration (the 
“SBA”) has denied guaranty purchase applications for over 3,600 PPP Loans pledged as PPPLF 
Collateral which could result in these PPP Loans not being fully guaranteed by the SBA. Moreover, 
Benworth has provided various facts to the Reserve Bank regarding the concerning state of 
Benworth’s financial condition. On December 27, 2023, Benworth informed the Reserve Bank that 
it is in arbitration proceedings with Oto Analytics (d/b/a “Womply”), and that the arbitrator issued 
an interim award that would require Benworth to pay Womply over $86 million. Benworth 
acknowledged to the Reserve Bank that it may not have access to sufficient funds to pay Womply 
the amount of the interim award or any larger amount that may be finally awarded, which assertion 
is supported by Benworth’s financial statements provided to the Reserve Bank. 
While the PPPLF Agreement does not require formal notice of defaults under the PPPLF 
Agreement, we wish to memorialize and provide notice of certain of the Events of Default that 
have occurred, without waiver of any other defaults that have occurred or may occur in the future. 
Accordingly, we hereby declare and provide notice to Benworth that Events of Default have 
occurred, as defined in the Operating Circular, including, without limitation, under sections (ii), 
(iii) and (vii) of the definition of an Event of Default. See Operating Circular at 2-3. The failure to
include reference to other defaults or Events of Default in this letter does not constitute a waiver
Case 3:23-cv-01034-GMM     Document 127-6     Filed 07/10/24     Page 1 of 2

 
 
 
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INTERNAL FR/OFFICIAL USE // EXTERNAL
of any such other defaults or Events of Default, or of any rights or remedies that may be available 
under the PPPLF Agreement or applicable law.  
In addition to the foregoing, the Letters of Agreement state that “all Advances made to the 
Borrower pursuant to the PPPLF shall become a recourse obligation if, in the sole discretion of the 
Reserve Bank, the Borrower (i) has breached any representations, warranties, or covenants made 
under the PPPLF Agreement or (ii) has engaged in any fraud or misrepresentation in connection 
with any Advance or request to obtain an Advance under the PPPLF.” See each Letter of 
Agreement at 4. Accordingly, under the terms of the PPPLF Agreement, the Reserve Bank hereby 
notifies the Borrower that the Borrower’s Obligations under the PPPLF Agreement have become 
full recourse obligations of the Borrower.  
While the Reserve Bank hopes to continue to work cooperatively with Benworth as it has 
to date, the Reserve Bank has not and does not intend to waive any rights or remedies of the Reserve 
Bank under the PPPLF Agreement or applicable law; nor does it waive or acquiesce in any Event 
of Default, whether or not referred to in this letter. Without limiting the generality of the foregoing, 
the Reserve Bank reserves all of its rights and remedies with respect to Events of Default under the 
PPPLF Agreement, including, without limitation, the right to take possession of the PPPLF 
Collateral, collect all proceeds received by Benworth in respect of the PPP Loans and apply them 
in accordance with the PPPLF Agreement, and the right to assert claims directly against Benworth 
without first seeking recourse against the PPPLF Collateral.  
The Reserve Bank hopes to continue to work cooperatively with Benworth with respect to 
these matters in furtherance of the prompt and orderly repayment of the Advances and the 
protection of the PPPLF Collateral.  
Please 
contact 
Avery 
Belka 
(Avery.Belka@sf.frb.org) 
and 
Braden 
Parker 
(Braden.Parker@sf.frb.org) if you have any questions. 
 
  
Sincerely, 
 
FEDERAL RESERVE BANK OF SAN FRANCISCO 
By: ____________________________ 
Name: Wallace Young 
Title: Vice President, Credit Risk Management 
       
cc:  
 
Michael Hantman (Michael.Hantman@hklaw.com) - Holland & Knight LLP 
Case 3:23-cv-01034-GMM     Document 127-6     Filed 07/10/24     Page 2 of 2

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