Le-Nature's Chapter 11 case conversion request denied

By Caroline Salls

Pittsburgh, Dec. 27 - Le-Nature's, Inc.'s Chapter 11 bankruptcy case will not be converted to Chapter 7 bankruptcy for liquidation, according to a Thursday filing with the U.S. Bankruptcy Court for the Western District of Pennsylvania.

In his order, judge M. Bruce McCullough said he took into account "the sales and organization of chaos that has taken place under the supervision to two successive fiduciaries."

As previously reported, Le-Nature's lender Wachovia Bank, NA requested the case be converted in June 2007 in an effort to cut escalating costs.

Wachovia said Le-Nature's has ceased operations with no chance of rehabilitation of the business, and the sole function of its bankruptcy cases is to liquidate the assets of the estate and investigate estate causes of action for the benefit of creditors.

Wachovia said conversion of the case to Chapter 7 offers an opportunity to end the estates' "financial hemorrhaging" by eliminating professional fees "and a futile plan process that offers nothing of value to creditors."

Equipment lessor Merrill Lynch Capital withdrew its own motion to convert the case to Chapter 7 in April 2007 following stiff opposition from Le-Nature's unsecured creditors.

After Merrill Lynch filed its motion to convert the case, the company's official committee of unsecured creditors said the move would hurt the company's ability to take legal action, which the committee said could be the main source of any recovery to unsecured creditors.

Le-Nature's, a Latrobe, Pa., manufacturer of flavored bottled water and other beverages, had an involuntary Chapter 7 bankruptcy case filed against it on Nov. 1, 2006. The case was converted to Chapter 11 on Nov. 3, 2006. The case number is 06-25454.

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