Hostess union and fund seek trustee appointment to liquidate estate

By Caroline Salls

Pittsburgh, Nov. 27 - The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCT) and the Bakery and Confectionery Union and Industry International Pension Fund are seeking appointment of a Chapter 11 trustee for Hostess Brands, Inc.'s bankruptcy case, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Given Hostess' administrative insolvency, the union and pension fund said the company's wind-down motion and the "assumption that the debtors will remain in possession during the liquidation phase of these cases without the unanimous consent of their creditor body, is simply untenable."

The union and pension fund said the Chapter 11 plan Hostess filed in October is "premised on the unachievable condition that certain administrative and priority creditors agreed to waive their claims."

At this point, the union and pension fund said it is impossible for the Hostess debtors to propose any confirmable plan.

After the company's proposed wind-down and sale process are complete, the union and pension fund said there is no viable exit strategy from the administratively insolvent cases in the absence of unanimous creditor consent.

According to the motion, this would leave the company with the choice of either seeking dismissal or conversion of its case or proposing an unconfirmable plan that does not pay the claims of non-consenting administrative and priority creditors in full.

The BCT and pension fund said none of these choices are in the best interest of Hostess' creditors and are not allowed under the Bankruptcy Code.

As a result, the union and pension fund said a Chapter 11 trustee should be appointed to liquidate the company's estates and conclude the bankruptcy cases.

Hostess Brands, an Irving, Texas-based operator of regional bakeries, filed for bankruptcy on Jan. 11, 2012. Its Chapter 11 case number is 12-22052.

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