Lhlc Corporation v. Cluett, Peabody & Company, Inc., and Deloitte, Haskins & Sells, Defendants

EASTERBROOK, Circuit Judge.

For many years Henry C. Lytton & Co., which operated a number of department stores, was a subsidiary of Cluett, Peabody & Co. In 1983 Cluett sold its stock in Lytton for $14.5 million to LHLC Corp., a closely-held firm that financed the acquisition almost entirely by debt, which it hoped to repay out of income from Lytton’s future operations. Almost $8 million of the purchase price represented the estimated value of Lytton’s inventory. Less than a year after acquiring Lytton’s, LHLC Corp. filed for bankruptcy. Among its creditors, to the tune of about $180,000, was…