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US judge allows Hostess to start shutdown
Source: Agencies |
November 23, 2012, Friday
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HOSTESS Brands Inc has won permission from a US bankruptcy judge to begin shutting down and expressed optimism it will find new homes for many of its iconic brands, which include Twinkies, Drake's cakes and Wonder Bread.
US Bankruptcy Judge Robert Drain in White Plains, New York, authorized current management, led by restructuring specialist Gregory Rayburn, to immediately begin efforts to wind down the 82-year-old company, a process expected to take one year.
"It appears clear to me that the debtors have taken the right course in seeking to implement the wind-down plan as promptly as possible," Drain said near the end of a four-hour hearing on Wednesday.
The judge authorized Hostess to begin the liquidation process one day after his last-ditch mediation effort between the Texas-based company and its striking bakers' union broke down. Drain said details of those talks are confidential.
Rayburn told the judge that about 15,000 workers will lose their jobs immediately. Most of the remaining 3,200 will no longer be employed after about four months.
"This is a tragedy, and we're well aware of it," Heather Lennox, a lawyer for Hostess, told the judge. "We are trying to be as sensitive as we can possibly be under the circumstances to the human cost."
The union, the Bakery, Confectionery, Tobacco and Grain Millers Union, has complained it should not be forced into new wage and benefit cuts, on top of earlier give-backs, while top executives rewarded themselves with higher pay, and that it was "well aware" of the potential consequences of that stance.
The union said in a court filing that its sole objective was to leave Hostess with "a real, rather than an illusory or theoretical, likelihood of establishing a stable business with secure jobs."
Hostess has about 36 plants, including three it decided to close after the strike began, as well as 565 distribution centers and 570 bakery outlet stores.
Speaking to reporters outside the courthouse, Rayburn said he was disappointed that the mediation failed and that he plans to move "extremely fast" to sell Hostess' assets. Asked which bidders may fare best, he said: "The one that pays the most."
Lennox said Hostess has received a "flood of inquiries" from potential buyers for several brands that could be sold at auction and expects initial bidders within a few weeks.
Joshua Scherer, a partner at Perella Weinberg Partners, which is advising Hostess, said the company was in "active dialogue" over its Drake's brand with one "very interested" party that had toured a New Jersey plant on Tuesday.
He said regional bakeries, national rivals, private equity firms and others have also expressed interest in various brands and that over 50 nondisclosure pacts have been inked.
"These are iconic brands that people love," Scherer said.
While prospective buyers were not identified at the hearing, bankers have said rivals, including Flowers Foods Inc and Mexico's Grupo Bimbo SAB de CV were likely to be interested in some of the brands.
Scherer said Hostess could be worth US$2.3 billion-US$2.4 billion in a normal bankruptcy.
US Bankruptcy Judge Robert Drain in White Plains, New York, authorized current management, led by restructuring specialist Gregory Rayburn, to immediately begin efforts to wind down the 82-year-old company, a process expected to take one year.
"It appears clear to me that the debtors have taken the right course in seeking to implement the wind-down plan as promptly as possible," Drain said near the end of a four-hour hearing on Wednesday.
The judge authorized Hostess to begin the liquidation process one day after his last-ditch mediation effort between the Texas-based company and its striking bakers' union broke down. Drain said details of those talks are confidential.
Rayburn told the judge that about 15,000 workers will lose their jobs immediately. Most of the remaining 3,200 will no longer be employed after about four months.
"This is a tragedy, and we're well aware of it," Heather Lennox, a lawyer for Hostess, told the judge. "We are trying to be as sensitive as we can possibly be under the circumstances to the human cost."
The union, the Bakery, Confectionery, Tobacco and Grain Millers Union, has complained it should not be forced into new wage and benefit cuts, on top of earlier give-backs, while top executives rewarded themselves with higher pay, and that it was "well aware" of the potential consequences of that stance.
The union said in a court filing that its sole objective was to leave Hostess with "a real, rather than an illusory or theoretical, likelihood of establishing a stable business with secure jobs."
Hostess has about 36 plants, including three it decided to close after the strike began, as well as 565 distribution centers and 570 bakery outlet stores.
Speaking to reporters outside the courthouse, Rayburn said he was disappointed that the mediation failed and that he plans to move "extremely fast" to sell Hostess' assets. Asked which bidders may fare best, he said: "The one that pays the most."
Lennox said Hostess has received a "flood of inquiries" from potential buyers for several brands that could be sold at auction and expects initial bidders within a few weeks.
Joshua Scherer, a partner at Perella Weinberg Partners, which is advising Hostess, said the company was in "active dialogue" over its Drake's brand with one "very interested" party that had toured a New Jersey plant on Tuesday.
He said regional bakeries, national rivals, private equity firms and others have also expressed interest in various brands and that over 50 nondisclosure pacts have been inked.
"These are iconic brands that people love," Scherer said.
While prospective buyers were not identified at the hearing, bankers have said rivals, including Flowers Foods Inc and Mexico's Grupo Bimbo SAB de CV were likely to be interested in some of the brands.
Scherer said Hostess could be worth US$2.3 billion-US$2.4 billion in a normal bankruptcy.
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