DALLAS — The liquidating trustee for Bruno's Supermarkets is suing the chain's former owner, Lone Star Holdings, charging that Lone Star used Bruno's to improve the marketability of Bi-Lo, a sister chain that was once operated with Bruno's as a single company.
Bruno's filed for bankruptcy protection in February and was ordered to liquidate in October. Creditors lost more than $290 million.
In a lawsuit filed in U.S. District Court here, the trustee, William S. Kaye, charged that "creditors losses could have been avoided if Bruno's management had acted in Bruno's and its creditors' best interests instead of acceding to the control and domination of its parent company." It names Lone Star and several Lone Star and Bruno's executives as defendants.
The suit alleges that Lone Star, which was operating Bi-Lo and Bruno's as a single company, split them into separate entities in 2007 so as to improve the marketability of Bi-Lo, and while doing so transferred many of Bi-Lo's liabilities onto Bruno's, despite Bruno's operating at a loss at the time of the spin-off.
Lone Star officials have petitioned the court to extend its deadline to move to dismiss, answer, or otherwise respond to the complaint to Feb. 1.
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