U.S. Bankruptcy Court Chief Judge M. Bruce McCullough yesterday vetoed the $20 million sale of fraud-riddled Le-Nature's Latrobe plant to Giant Eagle, ruling the region's largest supermarket intimidated a supplier into dropping out of the bidding.

The judge awarded the plant to the supplier, Cadbury Schweppes Bottling Group, which previously agreed to pay $19 million if something happened to Giant Eagle's bid.

But Cadbury now claims it never intended to bid and that it will sell the idled plant if it is ordered to follow through on its bid to purchase it. Giant Eagle is one of the potential buyers, Gary P. Nelson, Cadbury's attorney, told the judge.

The bizarre series of events makes one of Western Pennsylvania's most interesting business sagas even more compelling. Creditors took Le-Nature's, the maker of bottled water, tea and fruit juice, into bankruptcy in November after a custodian appointed by a Delaware court uncovered evidence of massive fraud.

Founder Gregory Podlucky, who along with other insiders was ousted by the Delaware judge, was implicated in the fraud and an attempt to cover it up. Those matters are being investigated by federal prosecutors and postal inspectors.

Lawyers previously have said Giant Eagle's actions also could become the subject of a federal investigation. There was no mention of that yesterday during a one-hour hearing before the judge.

Much of the debate centered on an Aug. 2 letter in which Giant Eagle notified Cadbury it was terminating the purchase of about $7 million in goods annually from the Dallas beverage and candy maker.

The letter did not mention the Aug. 9 auction of the Le-Nature's plant, but Giant Eagle made it clear the letter would not have been sent if Cadbury weren't bidding against Giant Eagle.

"It was a clear attempt to affect the auction," said Richard M. Pachulski, the attorney for the court-appointed trustee overseeing Le-Nature's.

Bernard D. Marcus, Giant Eagle's attorney, said his client took "legitimate business actions."

Judge McCullough angrily disagreed.

"You were trying to make them do what you wanted them to do by laying the pressure on them," he said.

Giant Eagle said it purchases more than $40 million from Cadbury annually.

Cadbury supported its customer at yesterday's hearing, saying the Aug. 2 letter had nothing to do with its decision not to increase its $19 million bid at the Aug. 9 auction. Giant Eagle topped that with a $20 million offer and Cadbury bowed out.

"We bid what we thought the project was worth," Mr. Nelson said the day after the auction.

Any efforts to curb bidding are of interest to Le-Nature's legion of creditors, who are owed more than $820 million. More active bidding could have marginally increased the amount of money available to pay them off. But they hope to recover much of what they are owed by suing Le-Nature's bankers and accountants for failing to uncover the fraud and certifying the company's books.

Making Cadbury the buyer instead of Giant Eagle will generate an extra $1 million for creditors: the $19 million purchase price plus a $2 million deposit the judge ruled Giant Eagle must forfeit. The judge also ordered Giant Eagle to pay the costs of investigating the incident.

Judge McCullough said he would have to think about whether there would be any problems with Cadbury in turn selling the plant to Giant Eagle, acknowledging there is little precedent for making that determination.

But the trustee questioned the propriety of allowing that to happen.

"I think the bankruptcy process will be tainted if Cadbury sells to Giant Eagle," Mr. Pachulski told the judge.