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New England Confectionery Company Adversary Complaint Filed

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The Chapter 11 Trustee assigned to the New England Confectionery Company case, Harold B. Murphy, filed with the U.S. Bankruptcy Court a complaint for breach of contract and for unfair and deceptive business practices against Round Hill Investments LLC (“Round Hill”), the purchaser of certain assets of NECCO pursuant to an Asset Purchase Agreement approved by the Court on May 29, 2018. The Trustee alleges, “Round Hill has breached by failing to pay $250,000 that was due on June 30, 2018 and by renouncing the remainder of its $1,000,000 post-closing payment obligation. As a pretext for its refusal to pay, Round Hill, in late June 2018, contrived a bad-faith, meritless allegation that the Chapter 11 Trustee has breached representations and warranties regarding NECCO’s compliance with federal regulations, specifically, regulations promulgated by the U.S. Food and Drug Administration (‘FDA’) that governed sanitation at NECCO’s manufacturing facility. Round Hill’s contentions are knowingly false: prior to the auction of NECCO’s assets in this Court, the Chapter 11 Trustee had provided Round Hill with: (1) a Warning Letter to NECCO from the FDA, by which the FDA informed NECCO that conditions at its manufacturing plant failed to conform to regulations…The Asset Purchase Agreement by which Round Hill purchased NECCO’s assets specifically identifies these FDA documents, and Round Hill discussed them with NECCO management before formulating its bids at auction in this Court. With full knowledge of the FDA documents, Round Hill, at auction, bid over two million dollars more than it had bid prior to obtaining the FDA documents. After confirming in open Court that it would be bound by its final bid at auction, Round Hill refused to close on the purchase of NECCO’s assets. It had no justifiable reason for refusing to close. In the best interests of NECCO and its creditors, however, the Chapter 11 Trustee agreed to sell NECCO’s assets to Round Hill for approximately $1,300,000 less that Round Hill had been bound to pay, and to make other voluntary accommodations, in order to close a sale. Having benefitted this much already, Round Hill now seeks to obtain, by knowingly false legal threats, a further discount of approximately $1,000,000. The captioned action is the Chapter 11 Trustee’s response to Round Hill’s cynical conduct.”

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The post New England Confectionery Company Adversary Complaint Filed appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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