Just two months after filing Chapter 11 bankruptcy to protect itself from a hostile takeover by its largest creditor, Crunchies Food Co. LLC has been acquired by that very same creditor, with a new company rising from the ashes. Chaucer Foods Ltd., a food ingredient supplier based in the United Kingdom, on Oct. 21 purchased all the assets of Crunchies. It then formed a new company, Crunchies Natural Food Co. LLC, and took a 65 percent equity stake in it. As part of the deal, SimplePitch Ventures, a Newport Beach investment firm, took an equity stake in exchange for fresh capital. Crunchies is a growing Westlake Village seller of dried fruit snacks that contain no genetically modified seeds or preservatives. James Lacey, who founded the company in 2006, will remain chief executive. He experienced a quick change of heart during the brief bankruptcy. “They invested in the company instead of damaging it,” Lacey told the Business Journal. Crunchies has grown rapidly the last few years, moving its healthy dried apples, bananas and berries into major retail chains, including Kroger Co., Wal-Mart Stores Inc. and Whole Foods Market Inc. Sales also got a boost from a licensing agreement with Warner Bros. Entertainment Inc. in Burbank so Crunchies could sell snacks in the shape of Looney Tunes characters. But Crunchies overextended itself and ended up owing about $4.4 million to its suppliers, according to the bankruptcy filing. Its largest creditor was Chaucer, which supplied strawberries. Chaucer filed a lawsuit against Crunchies last year, claiming the company owed it $1.5 million. Crunchies agreed to settle by making monthly payments, and paid back about $500,000 before it found it couldn’t comply with the payment schedule. Chaucer offered to convert its debt into equity and to invest an additional $1 million, even performing a due diligence review of Crunchies’ books. Then in August, Crunchies filed the bankruptcy, claiming that Chaucer’s real intent in the negotiations was to use the debt as a pretext for a hostile takeover. “(Chaucer) had plans to move into the United States market, and appeared interested in taking over the debtor as a launching platform,” the filing stated. David L. Neale of Levene, Neale, Bender, Yoo and Brill LLP in Los Angeles, represented Crunchies throughout the bankruptcy. He said the parties decided to bury the hatchet and move on, especially since Chaucer offered the best deal. “Under the circumstances it was the best result,” he said. “We approached a number of different parties about financing and as time passed the deal with Chaucer was the best available.” As part of the deal, Chaucer has forgiven the $1.5 million debt and pledged continued financial support for Crunchies. Chaucer Chief Executive Andy Ducker said the takeover is part of a strategic plan to become a global food company. “We’re confident that with our operational expertise and investment, the already successful Crunchies brand will develop to its full potential,” he said in a statement.
