Creditors of fraud-riddled Le-Nature's would get an additional $2.3 million toward the more than $820 million they are owed from a proposed settlement that would let Giant Eagle purchase the bankrupt beverage company's idled Latrobe plant after all.

The proposed agreement, announced yesterday, would avert a potentially costly, time-consuming legal battle against Giant Eagle that could be a major distraction as creditors pursue those responsible for one of the largest accounting frauds in Western Pennsylvania history.

Giant Eagle won the right to purchase the plant for $20 million at a court-supervised auction Aug. 9. It outbid Cadbury Schweppes Bottling Group, which supplies more than $40 million in goods annually to the region's largest supermarket chain.

However, U.S. Bankruptcy Court Chief Judge M. Bruce McCullough later disqualified Giant Eagle based on letters the company sent to Cadbury threatening to cancel $7 million in annual orders if Cadbury continued competing against it for the right to purchase the Le-Nature's facility. Instead, he ordered Cadbury to purchase the plant for $19 million, its final offer at the Aug. 9 auction. The judge also ruled Giant Eagle must forfeit a $2 million deposit.

Cadbury insisted Giant Eagle's letters had nothing to do with its decision to drop out of the bidding and that it was no longer interested in the plant. The Dallas company told the judge that if it were forced to purchase the plant, it would sell it, probably to Giant Eagle.

R. Todd Neilson, Le-Nature's court-appointed trustee, objected to Cadbury's plans and indicated he would sue Giant Eagle for damages.

Under the terms of the proposed settlement, Mr. Neilson would drop his objections to Cadbury selling the plant to Giant Eagle and would not pursue damages from the supermarket.

In exchange, Giant Eagle would pay $2.3 million, drop plans to appeal the judge's order that it forfeit the $2 million deposit, and pay about $89,000 to help move a sewer line at the plant, a cost Le-Nature's had agreed to pay.

The proposed settlement will be considered at a Sept. 25 hearing before Judge McCullough.

Giant Eagle said if the settlement is approved, it plans to start operating the plant within six weeks. It said it will initially hire about 50 workers.

The plant was idled in November shortly after a custodian appointed by a Delaware judge uncovered evidence of massive fraud implicating founder Gregory J. Podlucky, who along with other executives was ousted. Creditors took the company into bankruptcy a few days later.

Forensic accountants hired by Le-Nature's minority investors estimated the company had annual revenue of about $32 million, not the $287 million auditors certified in 2005.

The incident is being pursued by federal investigators. No criminal charges have been filed.

Le-Nature's creditors would collect $23.3 million if the judge approves the settlement between Mr. Neilson, Giant Eagle and Cadbury: $19 million from the sale price, the forfeited $2 million deposit, and Giant Eagle's $2.3 million payment.

Although it's their largest recovery to date, their collection efforts still have a long way to go. They are pinning much of their hopes on targeting Wachovia, Mr. Podlucky's banker and financial adviser, as well as the auditing firms that scrutinized the company's books.