## Facts

- Campbell Soup Company (Campbell) owned Vlasic Foods International, Inc. (Vlasic), a group of food businesses that Campbell separated into an independent public company through a 1998 spin-off.
- As part of the spin-off transaction, Campbell shifted a substantial debt obligation—about $500 million—to Vlasic, which Vlasic agreed to assume.
- Immediately after the spin-off, Vlasic’s publicly traded stock reflected a total market value of roughly $1.6 billion on the New York Stock Exchange.
- About two years later, Vlasic filed for Chapter 11 bankruptcy protection.
- VFB LLC (VFB) emerged from the bankruptcy proceedings as Vlasic’s successor in interest.
- VFB sued Campbell in federal district court, alleging that Campbell structured the debt shift in a manner that harmed Vlasic’s creditors and constituted either an actual fraudulent transfer (intent to hinder, delay, or defraud creditors) or a constructive fraudulent transfer (transfer made for insufficient value when the debtor was insolvent or inadequately capitalized).

## Issues

1. Whether Campbell’s transfer of the debt obligation to Vlasic in connection with the spin-off was an **actual fraudulent transfer** made with intent to hinder, delay, or defraud creditors.
2. Whether the debt shift was a **constructive fraudulent transfer**, including whether Vlasic was insolvent (or left with unreasonably small capital) at the time of the transaction and whether Vlasic received reasonably equivalent value.

## Decision

- The court entered judgment for Campbell on VFB’s fraudulent-transfer theories.
- The court concluded that VFB did not prove actual intent by Campbell to hinder, delay, or defraud Vlasic’s creditors.
- On constructive fraud, the court found VFB failed to show that Vlasic was insolvent (or rendered inadequately capitalized) at the time of the spin-off.
- In assessing solvency and value, the court treated contemporaneous public-market pricing of Vlasic’s stock as powerful evidence of the company’s enterprise value at the time of the transaction.

## Legal Principles

- A plaintiff asserting **actual fraudulent transfer** must prove intent to hinder, delay, or defraud creditors; subsequent bankruptcy alone does not establish the required intent.
- A **constructive fraudulent transfer** claim generally requires proof that the debtor did not receive reasonably equivalent value and that the debtor was insolvent (or left with unreasonably small capital) at the time of the transfer.
- For a company with actively traded public stock, contemporaneous market pricing may be strong evidence of the company’s value and solvency at the relevant time, and may outweigh litigation-driven valuation reconstructions absent a concrete showing that the market price was unreliable.

## Conclusion

The district court rejected VFB’s attempt to unwind the spin-off debt allocation as fraudulent, finding no proof of intent to defraud creditors and concluding that contemporaneous public trading values supported the view that Vlasic was solvent and adequately valued at the time of the transaction, so Campbell prevailed on the fraudulent-transfer claims.


VFB LLC v. Campbell Soup Co., 2005 U.S. Dist. LEXIS 19999 (2005)