Pennfield wins approval to check suitor's books
BY TIM MEKEEL, Business Editor
A U.S. Bankruptcy Court judge on Monday allowed Pennfield Corp. to search for evidence that its former suitor acted improperly.
Judge Bruce I. Fox said Pennfield can examine the books and interview the executives of Wellsource Nutrition to determine:
·Whether the financial information given by Wellsource to Pennfield was fraudulent.
·Whether Wellsource's failure to complete the purchase of Pennfield was due to "tortious interference by third parties."
·How Wellsource planned to get money from its financier, Nourican Trading, to finance the purchase of Pennfield.
·Why Wellsource claims it backed out of the deal because Pennfield secretly sold $2 million in inventory that was earmarked for Wellsource.
But Fox rejected Pennfield's request to search the books to see if Wellsource has the wherewithal to pay potential damages to Pennfield.
The judge called that request "unduly burdensome and intrusive."
Pennfield, the Lancaster-based dairy feed maker, filed for bankruptcy in October, then agreed to be bought by Wellsource for $15.6 million.
But in December, Wellsource didn't make the payment, prompting Pennfield to declare Wellsource in default.
Pennfield instead sold its assets piecemeal to Cargill, Keystone Mills and Hoober Feeds.
Then Pennfield asked Fox for permission to look into Wellsource's conduct.
Wellsource opposed the move, saying the request was too broad.
Wellsource added that Pennfield and its adviser both throughly examined Wellsource last fall before agreeing to the sale.
In other recent developments, Pennfield is seeking Fox's permission to auction its 164-acre farm in York on April 17 at 11 a.m.
Pennfield proposes paying U.S. Commercial Realty a 4 percent commission to handle the proceeding.
Pennfield also is seeking bankruptcy court approval to sell two 2010 Peterbilt tri-axle feed trucks to Keystone Mills for $220,000.
Finally, Pennfield is asking the bankruptcy court's approval to change its name to ETFF Corp.
It needs a new name because the assets sold to Cargill included the Pennfield name.
Pennfield also is seek court approval to change its name to ETFF Corp.