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Here are the missing last two FULL articles in reverse chronological order:
Soupman Sale Approval Withheld On Fairness Concerns
By Vince Sullivan
Law360, Wilmington (August 30, 2017, 7:39 PM EDT) -- A roughly $2 million proposed sale of Original Soupman Inc. assets to an affiliate of shareholder WealthColony Management Group LLC failed to gain bankruptcy court approval Wednesday, after two days of hearings on the terms and process behind the deal.
During a hearing in Wilmington, Delaware, U.S. Bankruptcy Judge Laurie Selber Silverstein said that the evidentiary record made at the hearing was not enough to satisfy the standards for approval of an asset sale under Section 363 of the U.S. Bankruptcy Code in light of Soupman’s board of directors not voting to approve the sale.
“The standard ... is well-known,” Judge Silverstein said in making her ruling. “It requires the court to find that the sale is a sound exercise of the debtors business judgment.”
Due to the lack of a resolution from the company’s two-person board, Judge Silverstein said, she was unconvinced Soupman actually knew what assets it was selling and what the estate would be retaining post-sale.
Gallant Brands Inc., a corporation formed by WealthColony for the purpose of acquiring the Soupman assets, was the only bidder to make a qualified offer ahead of Monday’s auction, other than the stalking horse bidder, which is also Soupman’s debtor-in-possession lender. The Gallant bid was for $2 million cash, outstripping the $1.7 million offered as part of the DIP lenders’ credit bid approved as a stalking horse offer earlier in the case.
When issues about the status of Gallant as a potential insider of the debtor were raised, Gallant and Soupman negotiated during the auction to leave behind avoidance actions and claims against the debtor’s directors and officers that might be brought by the estate.
However, Judge Silverstein determined Wednesday that Soupman Chief Restructuring Officer Michael Wyse and CEO and board member Jamie Karson made the decision to alter the stalking horse asset purchase agreement to reflect these changes to the deal with Gallant at the close of the auction. Testimony from Wyse at the hearing indicated that independent director Ronald Crane did not approve the alterations of the asset purchase agreement.
The DIP lenders remain as backup bidders following the auction and would purchase all the debtor’s assets, including causes of action.
Issues surrounding a Section 13d letter sent by WealthColony in the days before the auction-bid deadline also gave the court concern about the auction process, because WealthColony asserted in the letter that it acquired the written consent of enough shareholders to remove the board of directors and replace them with WealthColony's own directors.
Wyse testified that at least one of the 12 potential bidders ahead of the auction withdrew from the process due to concerns over the corporate governance of Soupman following WealthColony’s 13d letter, and that others may have dropped out for the same reason. Wyse said he did not reach out to other potential bidders after the letter was received.
What Wise did say on the stand was that he replied to WealthColony that Soupman contested the written consent and opened an investigation into the holdings of WealthColony in the debtor and the number of shares WealthColony was purporting to represent in the 13d letter.
However, Wyse said that he had no preliminary results from the investigation and could not confirm or deny WealthColony’s ability to take action regarding the composition of the board.
WealthColony principal Joseph Hagan said that WealthColony took Wyse’s reply at face value and did not pursue the replacement of the directors any further, but instead chose to make an offer in the auction.
Judge Silverstein said Wednesday that while she was making no determination on the intentions of WealthColony in filing the 13d, the timing and impact of it raised questions about the effect on bidding.
“I find this record does not support the finding that this was a fair sale process,” Judge Silverstein said.
She neither approved nor denied the sale motion, leaving the door open for actions from the debtor to supplement the record and resolve the objections of senior secured creditor Hillair Capital Investments LP. During a recess in the proceeding, Soupman's attorneys made attempts to rectify the issues the court highlighted before Judge Silverstein made her ruling.
Those attempts included convening a telephonic board meeting to adopt a resolution approving the asset purchase agreement with Gallant and filing complete schedules on the assets to be acquired in the deal and the assets that would be left behind in the estate.
Judge Silverstein said those actions were encouraging but had come too late in the game Wednesday to impact her decision.
The debtor's attorney Jeremy Johnson of Polsinelli PC said he would need time to confer with his clients and others to determine the best course of action going forward. Soupman’s DIP facility matures Thursday, and the debtor will be out of funding at that time absent any further action.
Hillair's attorney, Robert S. Brady of Young Conaway Stargatt & Taylor LLP, said he would like to look into the board’s new resolution regarding the sale via depositions of the directors.
The debtor is represented by Christopher A. Ward and Jeremy R. Johnson of Polsinelli PC.
WealthColony is represented by Colin R. Robinson of Pachulski Stang Ziehl & Jones LLP and Philip D. Forlenza and Donald F. Campbell Jr. of Giordano Halleran & Ciesla.
Hillair is represented by Robert S. Brady of Young Conaway Stargatt & Taylor LLP.
The case is In re: Original Soupman Inc. et al., case number 1:17-bk-11313, in the U.S. Bankruptcy Court for the District of Delaware.
FIRST
'Soup Nazi' Distributor Pegs Investor Group As Ch. 11 Buyer
By Matt Chiappardi
Law360, Wilmington (August 29, 2017, 9:06 PM EDT) -- The distributor for the chef who inspired the "Soup Nazi" character on "Seinfeld" told the Delaware bankruptcy court Tuesday that a unit of the shareholder group WealthColony Management Group LLC, which was once embroiled in a fierce dispute with the company, won an auction for its assets.
During a hearing in Wilmington, attorneys for Original Soupman Inc. told the court that WealthColony unit Gallant Brands Inc. had been deemed the winner of the auction Monday evening coming in with a bid that topped the stalking horse offer from the private undisclosed lender group that had provided the debtor with its post-petition financing.
The debtor-in-possession lender group, which extended $1.7 million in financing, had made a credit bid as its floor offer. Information about the amount of the winning bid had not been entered into the court record as of Tuesday.
U.S. Bankruptcy Judge Laurie Selber Silverstein had been slated to consider the sale at the hearing Tuesday, but delayed the proceedings from the bench to Wednesday to allow the sides to work out issues over a yet-to-be executed asset purchase agreement, and a potential objection from senior secured lender Hillair Capital Investments LP.
"We don't have a signed APA and don't have a [proposed sale] order," Hillair attorney Robert S. Brady of Young Conaway Stargatt & Taylor LLP told Judge Silverstein.
Hillair was concerned that the sale to Gallant could essentially be a sale to an insider, requiring higher court scrutiny, because a U.S. Securities and Exchange Commission regulatory filing had shown that two directors from Original Soupman's board had been removed earlier this month, replaced with two directors appointed by WealthColony.
One of the main points of contention were what assets were being sold in the sale, and whether that included claims against WealthColony, which would mean the buyer would be purchasing claims against itself.
Attorneys for the sides deliberated for nearly an hour in the hallway, and when they returned, Brady said that Hillair would likely not object at the hearing set for Wednesday if the buyer up for approval was indeed Gallant, or an affiliate, and the claims against WealthColony were not part of the asset package being sold.
Attorneys for both Original Soupman and WealthColony had earlier said that the APA was similar to the one the court already approved for the stalking horse bidder, save for the addition of "diligence language."
WealthColony has been embroiled in a dispute with Original Soupman, with the debtor filing an adversary action claiming the shareholder group had been waging a "smear campaign" to derail the bankruptcy that included efforts to stop post-petition financing and replace the company's board of directors.
Original Soupman said in its complaint that the shareholder group sent it a proposed restructuring strategy in June that involved a "likely fraudulent transfer" of the company's bulk soup business to a company controlled by WealthColony for $1 million. Original Soupman argued the plan would have left it weaker and with nearly all of its debt still intact.
The Original Soupman filed for Chapter 11 protection June 13, listing more than $10 million in debt and hoping to run a quick sale process that would keep the company alive as a going concern.
The New York-based company licenses and sells soup from the chef Al Yeganeh's recipes. Yeganeh owns the Manhattan restaurant Soup Kitchen International, and his brusque demeanor was the inspiration behind the "Soup Nazi" character on the long-running 1990s NBC sitcom "Seinfeld" who had strict ordering protocols and would often turn customers away by yelling, "No soup for you!" if the rules were breached.
The debtor is represented by Christopher A. Ward and Jeremy R. Johnson of Polsinelli PC.
Hillair is represented by Robert S. Brady of Young Conaway Stargatt & Taylor LLP.
WealthColony is represented by Colin R. Robinson of Pachulski Stang Ziehl & Jones LLP and Philip D. Forlenza and Donald F. Campbell Jr. of Giordano Halleran & Ciesla.
The case is In re: In re: Original Soupman Inc. et al., case number 1:17-bk-11313, in the U.S. Bankruptcy Court for the District of Delaware.
