According to the Pittsburgh Business Times, Giant Eagle Inc.’s planned $20 million purchase of the LeNature’s Inc. plant in Latrobe, Pa., is being slowed and could be scrapped because of allegations the grocery giant threatened another bidder.
Bankruptcy trustee R. Todd Neilson is spearheading an investigation, prompted by an anonymous tip from a Pittsburgh reporter, that O’Hara-based Giant Eagle threatened to pull Cadbury Schweppes products if the beverage company did not withdraw its $19 million bid.
Giant Eagle had planned to immediately use the facility by restarting production hiring 50 workers.
If Giant Eagle’s acquisition bid should unravel, Cadbury Schweppes has agreed to complete a deal to buy the plant by Aug. 31, according to Neilson’s attorney.
This situation is yet another bump in the road for the LeNature’s, which last November was forced into a Chapter 7 bankruptcy filing, which was later converted to Chapter 11. It was discovered that former CEO Gregory Podlucky inflated sales figures for 2005 to $275 million when actual numbers were $32 million. Furthermore, it is alleged that Podlucky used the company’s funds and assets (some of which have not even been discovered yet) for personal use.
As for the bankruptcy case, it is in a bit of a stalemate, with an August 30 hearing in Pittsburgh regarding a motion for dismissal that was made back in June.
In addition to bankruptcy, the case against LeNature’s, which owes credits approximately $850 million, is not over. Wachovia Bank, the primary lender behind the company, faces additional claims worth almost $40 million due to the bank and its auditors failing to notice the alleged fraud. Lastly, a dismissal means that civil investigations, which will certainly proceed regardless, would have to start from scratch. Not at easy task given the 1.5 million pages of documents that are expected to be part of the case.