Le-Nature's asks court to appoint trustee to replace custodian

By Caroline Salls

Pittsburgh, Nov. 3 - Le-Nature's, Inc. asked the U.S. Bankruptcy Court for the Western District of Pennsylvania to appoint a trustee for its bankruptcy case to replace the custodian appointed by the Court of Chancery for the State of Delaware, according to a Friday court filing.

On Friday, Le-Nature's removed a civil case from the Delaware court under which the custodian had been appointed. In that case, the company, its chief executive officer and chairman of the board Gregory J. Podlucky and three other board members were facing allegations of fraudulent and potentially criminal action.

Le-Nature's said the plaintiffs in the civil suit have instigated a criminal investigation into the activities and conduct of the company and four members of its board, and, given the nature of the allegations, Le-Nature's said it believes that it is in the best interests of the company's estate, its creditors, equity holders, employees, vendors and all other parties in interest that the company's operations be conducted under the guidance of a trustee in order to ensure the integrity of its operations and administration.

The company said appointment of a trustee is preferable to continuation of the custodian's services because the company's principal place of business is within the Western District of Pennsylvania; all of the board members named in the Delaware case are residents of western Pennsylvania; the principal assets of the company are in western Pennsylvania; the only connection between the company and Delaware is its incorporation in Delaware and a choice of venue provision in contracts between the company and the plaintiffs in the Delaware case; and the criminal investigation is taking place in western Pennsylvania.

In addition, the company said the custodian itself also requested authority for filing of a bankruptcy case.

Le-Nature's said the custodian was appointed a mere seven days ago, so appointment of a trustee would not cause a disruption.

The company said the trustee appointment would also help it avoid the expense associated with the use of a Delaware-based and appointed custodian administering the assets of an entity located in the Western District of Pennsylvania.

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. Its Chapter 7 case number is 06-25454.

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