Hostess Brands Inc., the bankrupt maker of Wonder bread and Twinkies, is seeking a third extension of its exclusive right to file a bankruptcy plan and solicit creditor votes.
“A reasonable extension of exclusivity to permit the debtors to further this process, determine if a liquidating plan is possible and develop the terms of such a plan is warranted,” Hostess said in a filing today in U.S. Bankruptcy Court in White Plains, New York.
The 82-year-old maker of Hostess CupCakes, Ding Dongs and Ho Hos was undone by a strike by its bakers’ union after changes in American diets led to years of declining sales while ingredient costs and labor expenses (IBCIQ:US) climbed. The decision to liquidate capped a weeklong standoff between the Irving, Texas- based company, once the largest U.S. wholesale baker, and a union that called a proposed labor contract “horrendous.”
The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9 after U.S. Bankruptcy Judge Robert Drain imposed contract concessions opposed by 92 percent of the union’s members. The union represents about 5,000 Hostess workers.
Drain at a Nov. 29 hearing gave final approval of Hostess’s request to sell its assets and eliminate about 18,000 jobs. The transactions may generate about $1 billion, financial adviser Joshua Scherer of Perella Weinberg Partners LP estimated last month.
The company was worth $450 million in 2011, David Rush, the baker’s interim treasurer, told Drain at the hearing. The 2011 estimate should be re-evaluated because of potential buyers’ interest in the company’s brands and intellectual property, Rush said.
Hostess has suggested a preliminary bid deadline of Dec. 10, with most initial or so-called stalking-horse purchase agreements set in January or February and auctions to be held beginning in February and March, according to court papers.
The company said in court papers that officials “will not have a good sense of the proceeds” possible until early in 2013, and it wants to extend the exclusivity period until March because officials “do not desire to prepare a liquidating plan if the sale process ultimately demonstrates” that confirmation is in doubt.
Hostess sought court protection in January for the second time, less than three years after completing a restructuring that spanned 4 1/2 years. It listed assets of $982 million and debt of $1.43 billion in the January filing.
The company, then known as Interstate Bakeries Corp., first sought court protection in its former hometown of Kansas City, Missouri, in 2004 blaming stiffer competition and higher prices for raw materials. Interstate left bankruptcy in February 2009 under the control of lenders and buyout firm Ripplewood Holdings LLC. It changed its name to Hostess Brands in October 2009, according to data compiled by Bloomberg.
The new case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains). The prior bankruptcy was In re Interstate Bakeries Corp., 04- 45814, U.S. Bankruptcy Court, Western District of Missouri (Kansas City).
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