In the latest twist in a story full of unusual developments, the U.S. Bankruptcy Court in Pittsburgh is investigating grocery retailer Giant Eagle Inc.'s Aug. 9 purchase of Le-Nature's Inc. blow molding and injection molding plant in Latrobe, Pa.
Details of the investigation will be presented in an Aug. 30 hearing, according to court documents. R. Todd Neilson, the trustee handling the Chapter 11 case, declined comment.
Giant Eagle and Cadbury Schweppes Bottling Group Inc. were bidding against each other for the blow molding and water purification plant. Giant Eagle won the auction with its $20 million bid. According to an Aug. 22 report from the Associated Press, Giant Eagle is being investigated for an ``improper bidding process'' in which officials allegedly threatened to stop selling Cadbury Schweppes products if Cadbury outbid Giant Eagle.
``We are cooperating fully with the review of the bidding process,'' Giant Eagle spokesman Dan Donovan said in an Aug. 23 telephone interview. ``We will be in contact with the trustee's office. Those conversations will be private and we will not be commenting on them publicly.''
Le-Nature's, a defunct Latrobe-based maker of flavored water, fruit juices and teas, was forced into bankruptcy Nov. 1 under allegations of fraud, including hugely inflating sales numbers, document shredding and forging financial documents.
Le-Nature's injection molded its own PET preforms and blow molded them into bottles at its headquarters plant in Latrobe and a second factory in Phoenix.
A criminal investigation continues into the activities of Greg Podlucky, Le-Nature's former chief executive officer.
In court filings, Neilson said a tremendous amount of progress has been made in recovering and liquidating the assets, resolving equipment disputes and deciphering the financial puzzle left by Podlucky.
The asset auction in Latrobe represented the opportunity Giant Eagle officials wanted to vertically integrate. The company said in a news release that the purchase would enhance Giant Eagle's growing beverage business.
``The purchase of the closed Le-Nature's plant is a unique opportunity for Giant Eagle to manufacture its own beverages and to provide more than 50 full-time jobs in Latrobe,'' Giant Eagle special counsel Dan Shapira said in the release.