Soupman Inc., a company that licenses the name made famous by the sitcom “Seinfeld,” filed for bankruptcy on June 13 in Delaware, just weeks after its chief financial officer was arrested for tax evasion.
The debtor, now led by former Dentons and McCarter & English lawyer Jamieson Karson, has retained Polsinelli for outside counsel as it pursues a potential sale in Chapter 11. But some other large law firms will come up empty as a result of Soupman’s insolvency, not unlike customers that once visited Ali “Al” Yeganeh’s famous soup seller, only to be told, ” No soup for you!“
According to a list of Soupman’s 20 largest unsecured creditors filed on June 15 with a U.S. bankruptcy court in Wilmington, the company owes $415,255 to Hughes Hubbard & Reed; $61,926 to New York’s Gage Spencer & Fleming; $54,050 to Sheppard, Mullin, Richter & Hampton; and $53,872 to New York’s Robinson Brog Leinwand Greene Genovese & Gluck.
Those sums will almost certainly be completely written off, as unsecured creditors are looking at few returns from Soupman’s bankruptcy case. The company, based out of an office park in Staten Island, New York, listed between $1 million and $10 million in assets against liabilities ranging from $10 million to $50 million in its Chapter 11 petition.
Polsinelli financial restructuring partner Jeremy Johnson in New York, who is representing Soupman along with the firm’s restructuring practice co-chair Christopher Ward in Wilmington, said that his client was already facing a difficult financial situation before the arrest of CFO Robert Bertrand last month.
The Southern District U.S. Attorney’s Office has charged Bertrand with not paying more than $593,000 in income taxes and paying Soupman employees about $2.85 million in unreported cash and stock awards between 2010 and 2014.
Soupman announced in late May that it had suspended Bertrand and would conduct an international investigation into his alleged actions. Polsinelli’s Johnson said that Soupman’s CEO, Karson, has not been accused of any wrongdoing and will continue to lead the company.
Karson was hired in August 2015 after he spent a little more than a year as senior counsel at Dentons in New York. Karson, who previously served as special counsel at McCarter & English, is probably best known for having been the CEO of popular shoe retailer Steve Madden Ltd. That company’s legal troubles—chronicled in part by Martin Scorsese in his 2013 film “The Wolf of Wall Street”—led Karson to assume control of Steve Madden after its namesake resigned in 2003.
Karson, who spoke with The American Lawyer in 2009 about his experience running Steve Madden, did not return a request for comment about Soupman’s financial predicament.
Soupman, which Johnson said only has a few thousand dollars left in the bank, no longer has the cash to make soup. But in recent years the company has moved away from a manufacturing model, instead licensing Yeganeh’s soup recipes to drum up bulk sales in supermarkets and focusing on franchising and branding opportunities stemming from his former flagship location in midtown Manhattan. (Soupman’s initial bid to start a nationwide chain of stores has largely been unsuccessful—Johnson said the company has only about eight or nine locations left.)
Johnson, who joined Polsinelli in 2015 from McDermott Will & Emery, said his firm got the call to advise Soupman from Michael Wyse, a turnaround expert hired by the company in late May as its chief restructuring officer and interim CFO after the charges were unveiled against Bertrand.
Soupman filed for Chapter 11 in Delaware, Johnson said, because the state’s bankruptcy courts are better equipped to expedite a quick sale of an insolvent business.
But Soupman no longer needs to proceed down that path, Johnson added, as a result of lining up $2 million in debtor-in-possession financing from a private investment fund. As for the firms listed on the company’s list of unsecured creditors, trademark records show that Sheppard Mullin handled some intellectual property work for Soupman, while Robinson Brog represented it in litigation. Hughes Hubbard has previously advised Soupman-related entities in bankruptcy court matters.
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