Processing Magazine

Court rules for Campbell Soup in IPO suit

September 20, 2005

A federal court in Delaware exonerated Campbell Soup Company of charges of fraud in connection with its spin-off of Vlasic Foods International, the Associated Press reports. Creditors had accused the Camden, N.J., food company of packaging its money-losing lines of business into the new public company and sending it into the market with little chance of survival. U.S. District Judge Kent Jordan ruled against them, finding that the Vlasic business was solvent at the time it hit the public market, so Campbell Soup isn''t liable for the company''s later collapse into bankruptcy. The lawsuit was part of a continuing effort to raise money to pay creditors, mainly bondholders, who bought into a $200 million debt offering more than a year after the Vlasic businesses were launched into a separate company. In addition to the pickle line, Campbell Soup pushed its Swanson''s frozen food and other businesses into the new company. As part of the spinoff, Campbell Soup transferred $500 million in debt to Vlasic, which wound up filing for Chapter 11 protection in January 2001. Creditors had hoped to recover more than $544 million from Campbell Soup in the case. During the bankruptcy, Vlasic, Swanson and other brands were sold to Pinnacle Foods Corp. for $335 million, while sales of other lines raised about $20 million in additional cash.