The soup recipes of Hale & Hearty, the New York chain forced into bankruptcy last year, are up for grabs after its lawyers settled a fight with a wholesale food manufacturer that claimed to own the brand.
(Bloomberg) — The soup recipes of Hale & Hearty, the New York chain forced into bankruptcy last year, are up for grabs after its lawyers settled a fight with a wholesale food manufacturer that claimed to own the brand.
The deal, announced in bankruptcy court Tuesday, clears the way for the beleaguered chain to sell its soup recipes and other intellectual property — including its website and branding — to the highest bidder.
The process had been stymied by a dispute with Mauzone Food Services, a kosher food maker that has been selling soups under the Hale & Hearty name in recent months. Mauzone said it bought the rights to Hale & Hearty’s brand when it took over the soup chain’s Brooklyn factory last year, but the trustee overseeing Hale & Hearty’s liquidation disagreed.
“We are trying to sell the intangible assets as quickly as possible,” Lauren Kiss, an attorney representing the trustee who’s overseeing the business’s liquidation, said in a bankruptcy hearing Tuesday. “The longer the brand is out of the market the less valuable it is.”
The brand — once a lunchtime favorite for Midtown office workers — is likely one of the most valuable assets left for the company.
The parties came to a tentative settlement Tuesday before a hearing with US Bankruptcy Judge James Garrity. Under the deal, Hale & Hearty is allowed to sell all of its intellectual property, while Mauzone will hand over branding it has been using and pay $50,000 for furniture, fixtures and equipment at the Brooklyn facility. Mauzone will also have to prove it is no longer making Hale & Hearty soups.
Food Fight
After shuttering all of its stores last year, Hale & Hearty sold the East Williamsburg factory lease to Mauzone, according to court papers. Hale & Hearty was forced into bankruptcy shortly after.
But terms of the factory deal — which were not fully documented in writing — weren’t clear. Hale & Hearty’s bankruptcy trustee claimed that the sale was just for the soup-making facility, whereas Mauzone said it included the chain’s intellectual property. As a result, Mauzone soon began to not only use the bankrupt firm’s recipes, but also sell soups under its branding.
In October, an email from a Mauzone executive announced the return of Hale & Hearty soups to New York, writing that the company had acquired the brand and would “uphold, honor and protect the original delicious product that we have all come to know & love,” court papers show. Hale & Hearty filed a cease-and-desist warning just before Thanksgiving.
Once the dispute is formally settled, the trustee will kick off a sales process for the brand’s intangible assets, with Kiss indicating that there have already been talks with some interested buyers.
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