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Soupman files for bankruptcy

Chain gets funding to keep the business operational

Soupman Inc. filed for bankruptcy this week, less than a month after its chief financial officer was indicted on tax fraud charges.

The maker of “Original Soupman,” which for much of its history operated a soup chain, also said it has received $2 million in lending from a private investment firm to keep it afloat during the bankruptcy process.

The company earlier this month hired Michael Wyse, of Wyse Advisors, as its chief restructuring officer.

Soupman filed a petition late on Tuesday in federal bankruptcy court in Delaware. The company listed assets between $1 million and $10 million, and liabilities between $10 million and $50 million.

The bankruptcy also came after one of the company’s largest shareholders has started raising questions about the company’s finances — particularly its use of funds following a rights offering last year.

WealthColony Management Group LLC, which owns more than 23 percent of Soupman’s stock, proposed that a new company be formed to acquire rights to manufacture and sell Soupman products.

The investor earlier this month suggested the company’s chairman and CEO, Jamieson Karson, resign. The investor also suggested that its manager, Jeffrey Freedman, be named Soupman’s chairman following Karson’s resignation.

Soupman rejected that deal, and WealthColony soon raised questions about Soupman’s use of $3.7 million in proceeds from a stock offering last year. WealthColony also raised questions about one of Soupman’s board members, Sebastian Rametta, who was convicted in 2001 in connection with a stock fraud case.

WealthColony questioned why Soupman had little cash and inventory despite having borrowed the $3.7 million in the past 10 months.

Soupman licenses the recipes of Al Yaganeh, the “Soup Nazi” character from the television program “Seinfeld.”

Soupman had nine franchised locations as of Aug. 31, but more recently the company has focused more intently on selling its Original Soupman brand soup to grocers, convenience stores and other restaurant chains.

The company’s most recent financial report said it no longer has revenue or costs associated with its franchise operations. About 6 percent of revenue last year came from franchising.

Soupman reported a net loss of $1.7 million in the six months ended Feb. 28, on revenue of $1.9 million. The company had a working capital deficit of $9.4 million.

In May, the company’s CFO, Robert Bertrand, was charged in a New York federal court over failing to pay $594,000 in Medicare, Social Security and federal income taxes for Soupman employees from 2010 through 2014.

Soupman indicated that the indictment “will not make it easier for us to raise the capital we need to remain in business.”

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

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