Sale of Original Soupman Approved by Bankruptcy Judge

By Lillian Rizzo Features Dow Jones Newswires

The Original Soupman Inc., the soup chain and wholesaler made famous by the "Seinfeld" television series, won court approval this week to sell all of its assets.

Continue Reading Below

Judge Laurie Silverstein of the U.S. Bankruptcy Court in Wilmington, Del., signed off on the sale Thursday, court papers show. The approval comes a week after Judge Silverstein expressed concerns about the nature of the sale process, sending the company and its buyer back to the drawing board, Soupman attorney Jeremy Johnson said.

The company licenses the recipes, likeness and name of Al Yeganeh, the man who inspired the "Soup Nazi" character on "Seinfeld." It sought bankruptcy protection in mid-June, soon after one of its former top executives was indicted on charges of tax evasion.

From the outset, the company said it had no other option but to pursue a sale process of all assets.

In July, Soupman had received a so-called credit bid from its bankruptcy-loan agent, meaning the debt would be forgiven by the lender in exchange for control of the company. However, the $1.7 million bid, which set the floor at the auction, was topped by a $2 million offer from Gallant Brands Inc., an affiliate of WealthColony Management Group LLC.

Earlier in the bankruptcy proceedings Soupman found itself at odds with WealthColony, a penny-stock investor. In the weeks following its bankruptcy filing, Soupman sued WealthColony for allegedly trying to shake down the company for cash, as well as for control of the company.

Continue Reading Below

Soupman had alleged in a lawsuit that WealthColony had attempted to take over in the months leading up to the bankruptcy filing, and cited a number of "harassing" text messages sent by the firm's majority member, Joseph Hagan.

The script was flipped, however, when WealthColony's affiliate showed up at the auction.

Judge Silverstein had reservations about the bid from Soupman's alleged harasser, however. Following a two-day hearing last week, he sent Soupman and Gallant back to revise the asset purchase agreement, Mr. Johnson said.

But on Thursday, with a revised agreement in hand, Judge Silverstein signed off on the sale to Gallant.

The Staten Island, N.Y.-based Soupman found itself filing for bankruptcy protection when it ran out of money to make soup, Mr. Johnson previously said in court. Soupman owns a small restaurant chain and also distributes a variety of soups to about 6,500 grocery stores in the U.S. In addition, the company has contracts to sell its packaged soups to grocery stores, franchisees and the New York City public school system, according to court papers.

Soupman's cash crunch came as former Chief Financial Officer Robert Bertrand was charged with 20 counts of failing to pay federal income taxes, Medicare and Social Security for Soupman's employees.

Write to Lillian Rizzo at Lillian.Rizzo@wsj.com

(END) Dow Jones Newswires

September 08, 2017 17:22 ET (21:22 GMT)