Judge Revokes Giant Eagle/LeNature Purchase; Retailer Plans Appeal

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Judge Revokes Giant Eagle/LeNature Purchase; Retailer Plans Appeal

PITTSBURGH -- A federal bankruptcy court judge Thursday revoked the sale of the LeNature's Inc. bottling facility in Latrobe, Pa., to Giant Eagle Inc. here, and awarded it instead to competing bidder Cadbury Schweppes Bottling Group Inc. for $19 million.

Siding with a court-appointed LeNature's trustee, bankruptcy court Judge M. Bruce McCullough ruled that Giant Eagle acted in bad faith during an auction process for the bottling plant, by threatening to discontinue carrying 15 Cadbury Schweppes soft drinks, teas, and bottled waters at its stores.

A Giant Eagle spokesman told Progressive Grocer the chain would appeal the decision. Meanwhile, Cadbury Schweppes told the judge that it no longer wanted the plant.

During the hearing, the judge also ruled that Giant Eagle must forfeit its $2 million deposit for the plant, and pay all of the costs related to the investigation.

The bankrupt LeNature's court-appointed trustee, R. Todd Neilson, had asked on Wednesday that the judge void the auction results and award the plant to Cadbury. According to local reports, however, Cadbury subsequently said "no action taken or omitted by Giant Eagle had any influence on Cadbury's decision not to bid more than $19 million" for the plant.

When Giant Eagle raised its bid in the auction from $18.9 million to $20 million, Cadbury didn't increase its original offer.

Last November, LeNature's was forced into a Chapter 7 bankruptcy filing, which was later converted to Chapter 11, after it was discovered that its former c.e.o. inflated sales figures for 2005 to $275 million when actual numbers were $32 million.