Le-Nature's lender agent claims disclosure revisions flawed, underestimate 'hurdle' to creditor recovery

By Jennifer Lanning Drey

Portland, Ore., March 31 - An attorney for Le-Nature's Inc. lender agent Wachovia Bank, NA sent judge Bruce McCullough a letter detailing concerns related to revisions made to the company's disclosure statement and asking the court to address the issues at an April 8 status conference, according to a Friday filing with the U.S. Bankruptcy Court for the Western District of Pennsylvania.

Specifically, the letter claimed that rather than replace a previously "misleading" liquidation analysis, Le-Nature's has included 34 pages of "purported" liquidation analyses that are "incomprehensible" and "inconsistent."

Additionally, the lender agent believes the revisions continue to underestimate what the company has classified as the "hurdle" to unsecured creditor recovery. In its latest revisions, Le-Nature's upped the amount to $60.65 million from a previous $32.5 million.

However, Wachovia said the new "hurdle" amount fails to provide for the repayment of the $15 million principal of the company's exit facility, as well as litigation fees and a cash reserve for Wachovia's $2.8 million claim.

Wachovia said, "The true hurdle before unsecured creditors receive any distribution will far exceed the stated $60.65 million."

The letter also claimed that Le-Nature's disclosure revisions do not comply with the court's previous direction that the company change the composition of the liquidation trust oversight board in favor of unsecured creditors once lenders receive distributions of $50 million. Instead, the revisions increase the threshold for the triggering event by millions of dollars, the lender argued.

Wachovia further said Le-Nature's revisions do not adhere to the court's request that it provide a description of avoidance actions and other estate claims and a projection of recoveries.

Finally, the lender said the disclosure statement's discussion of pending litigation in North Carolina and the Southern District of New York is misleading and omits certain facts.

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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