Question: What do bid tampering, an equipment ownership dispute and a $1 million model train set have in common?

Answer: They’re all part of the continuing saga of Le-Nature’s bankruptcy case.

Le-Nature’s was forced into bankruptcy in October 2006 amid charges of massive fraud perpetrated by its senior executives. Noted turnaround firm Kroll Zolfo Cooper appointed by a state judge in Delaware uncovered the magnitude of the fraud, which involves more than $725 million in debt-related obligations including $300 million of capital lease obligations.

Over the past year, the demise of the Pennsylvania beverage company went from a Chapter 11 restructuring, to a muddled Chapter 7 liquidation, and finally, at press time, to something resembling a three-ring circus. And throughout the summer, court-appointed trustee R. Todd Neilson has had his hands full as the ringmaster.

Most recently, Neilson challenged supermarket chain Giant Eagle’s $20 million acquisition of Le-Nature’s Latrobe bottling plant — which has been sitting idle for months — following an allegation of bid tampering in the days leading up to the August 9 auction for the plant.

The trustee claimed that Giant Eagle — which operates 225 supermarkets and more than 125 fuel and convenience stores in western Pennsylvania, Maryland, Ohio and West Virginia — threatened to stop selling rival bidder Cadbury Schweppes’ products if the company out-priced it.

In a letter dated August 2, Giant Eagle’s SVP of grocery merchandising, Ray Smaltz, wrote to Cadbury, “…for reasons I am not at liberty to disclose, we have determined that it is in Giant Eagle’s best interest to purchase these types of products from other suppliers.” Then, six days after the auction and Giant Eagle’s winning bid, Smaltz sent a follow-up: “Please be advised Giant Eagle has postponed the decision to no longer purchase [these] products.”

That was enough for U.S. Bankruptcy Judge M. Bruce McCullough who invalidated the sale, ruling instead that UK-based Cadbury Schweppes was to acquire the facility for $19 million. In agreeing with Neilson’s claim, McCullough also ruled that Giant Eagle must forfeit its $2 million deposit for the plant and pay all costs of the investigation. Unfortunately for Cadbury, they say they don’t want the plant anymore. Giant Eagle is hoping to reach a settlement with the court that will allow it to keep the plant.

Meanwhile, 2,000 miles away in Phoenix, the auction of Le-Nature’s bottling plant there hit a snag as well. In August, squabbling between equipment providers, financiers and the building’s lender, LNR Property Corp., over who owns certain pieces of machinery inside the facility, threatened to delay the auction of the 530,000-square-foot industrial building. LNR Property filed for foreclosure on the property in Arizona Superior Court in June. As Monitor went to press, a judge was set to rule on whether or not the auction would proceed.

Just when it seemed the summer would end leaving Le-Nature’s creditors empty-handed, Neilson managed to pull a small coup of sorts. A model train set once owned by Le-Nature’s founder and CEO Gregory Podlucky fetched a bid of $680,000 at an auction.

Podlucky reportedly spent $1 million assembling the 8,000-piece set. Joe Gryzboski Jr., who owns Gryzboski’s Train Store in Scranton, PA, outbid collector Scott Griggs, president of Trainz.com, who had reached an agreement with the Le-Nature’s trustee to pay $575,000 for the set. So far, there has been no word of bid tampering, but when it comes to Le-Nature’s, anything is possible.

The plot thickens: On Sept. 18, a group of lenders filed a lawsuit in federal court in New York against Wachovia Capital Markets alleging the firm had knowledge of Le-Nature’s financial troubles prior to the issuance of a $285 million credit facility. The lawsuit was filed on behalf of a group of funds, trusts and others who hold more than $165 million of the debt issued under the credit facility.