The Third Circuit, on March 30, 2007, affirmed a district court judgment dismissing a $500 million fraudulent transfer and breach of fiduciary duty suit against Campbell Soup Co., the former parent of Vlasic Foods International ('VFI' or the 'debtor').
Fraudulent Transfer Analysis Turns Sour
The Third Circuit, on March 30, 2007, affirmed a district court judgment dismissing a $500 million fraudulent transfer and breach of fiduciary duty suit against Campbell Soup Co., the former parent of Vlasic Foods International ('VFI' or the 'debtor'). <i>VFB, LLC v. Campbell Soup Co.</i>, 2007 WL 942360 (3d Cir. 3/30/07). VFI's creditors, acting through the reorganized entity, known as VFB, claimed that Campbell's March, 1998 $500 million stock sale (or 'leveraged Spin') of its Specialty Foods Division (including subsidiaries such as Vlasic (pickles) and Swanson (TV dinners)) to VFI, a newly formed, wholly owned subsidiary, was a fraudulent transfer because VFI did not receive reasonably equivalent value and because its $500 million payment rendered it insolvent and under-capitalized. The Third Circuit, however, held that the District Court had properly found the Division acquired by the debtor to be 'worth well in excess' of the $500 million purchase price, and that the debtor was solvent at the time of its 1998 purchase. Relying on the District Court's market capitalization
By
Michael L. Cook
Lawrence V. GelberThis premium content is locked for The Bankruptcy Strategist subscribers only
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