Bankruptcy court proceedings brought key developments last week for two beverage companies with significant plastics processing assets.
In Pittsburgh, grocery retailer Giant Eagle Inc. won an auction bid for beverage firm Le-Nature's Inc. of Latrobe, Pa., on Aug. 9. Pittsburgh-based Giant Eagle bid $20 million for Le-Nature's Latrobe plant, beating a $19 million bid from Cadbury Schweppes Bottling Group Inc.
Meanwhile, in an unrelated case in Denver, lenders foreclosed on bottled water firm Biota Inc. of Telluride, Colo., on Aug. 8. Biota's Chapter 11 reorganization case was dismissed, and the future of the company's plant is still in question.
For Le-Nature's, the latest news on the asset sale is straightforward, unlike the rest of the case. Late last year, the firm was forced into bankruptcy under allegations of fraud, including hugely inflated sales numbers, document shredding and forging financial documents.
Le-Nature's injection molded its PET preforms and blow molded bottles for its flavored water, fruit juices and teas. The firm had plants in Latrobe, which was its headquarters, and in Phoenix.
The Phoenix assets will be auctioned Aug. 23, court documents said. Equipment includes five 500-ton Husky presses and seven Krones Contiform blow molders.
An official with the U.S. Attorney's Office in Pittsburgh said by telephone Aug. 9 that its investigation into Le-Nature's is ongoing.
At Biota, developments are still cloudy. Despite the foreclosure, Biota founder and Chief Executive Officer David Zutler wants to keep the Telluride operation. In a prepared statement sent to Plastics News on Aug. 9, Zutler said he has partnered with an equity group that wants to buy the assets, and he is seeking other partners.
However, competing bidders may come forward.
``The property went to sale today,'' said Ed Cordes, a receiver handling the asset sale with Cordes & Co. Inc. of Denver. ``They now have 75 days to redeem the property.''
Separately, Biota is in the process of filing several claims in U.S. District Court in Telluride against its primary lender, UPS Capital Business Credit. According to court documents, Biota owes UPS roughly $8.8 million.
Zutler would not explain his claims against UPS. ``The case is going to be tried in court,'' Zutler said. ``The answers will come out in the court proceedings.''
In his statement, however, he said he wants a jury trial and is seeking more than $90 million in damages. The statement plays up Biota's ``green packaging'' credentials - the company made bottles from corn-based polylactic acid - and contrasted it to UPS' package-delivery operations.
``This is a classic David vs. Goliath story,'' Zutler said. ``UPS, through its worldwide fleet of planes and trucks and a contributor to global warming, is trying to put Biota out of business.''
An official with UPS Capital Business Credit could not be reached for comment.
Cordes said in court filings that Biota began operating in 2004 but was unable to make a profit. By the end of 2006, it had incurred operating losses of $7.1 million. Cumulative losses hit $8.2 million, including roughly $1.2 million incurred before its startup.
Biota's assets include a 21,500-square-foot bottling plant in Ouray, Colo., and 15,000 square feet for warehousing. A related firm, unnamed in documents, sold bottle preforms to Biota.