Bakers' union appeals court approval of Hostess Brands' wind-down plan

By Jim Witters

Wilmington, Del., Dec. 14 - Court approval of Hostess Brands Inc.'s wind-down plan has been appealed by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and the Bakery and Confectionery and Industry International Pension Fund, according to documents filed Dec. 14 with the U.S. Bankruptcy Court for the Southern District of New York.

The bankruptcy court approved the wind-down plan on Nov. 30.

The plan calls for the company to sell its assets, including its brands and facilities and hold going-out-of-business sales at its retail locations.

The final wind-down order also included court approval of the company's use of cash collateral and modifications to its debtor-in-possession financing, as well as approval of employee retention and management incentive plans.

Hostess' board of directors said it authorized the wind-down to preserve and maximize the value of the estate after the bakers' union initiated a nationwide strike.

Hostess said the strike crippled its ability to produce and deliver products at multiple facilities.

Wind-down process

As previously reported, the wind-down process is expected to take one year and will be completed in four phases, including a plant wind-down, depot wind-down, retail store wind-down and corporate wind-down.

During the wind-down, Hostess said, all perishable baked goods inventory located at the retail stores will be either sold to customers through going-out-of-business sales, abandoned and donated to charity or destroyed or grouped together and transferred to owned retail stores.

The company said the wind-down means the closure of 33 bakeries, 565 distribution centers, about 5,500 delivery routes and 570 bakery outlet stores throughout the United States.

Hostess said its DIP lenders agreed to allow it continued access to the $75 million financing facility put in place at the start of the bankruptcy cases to fund the sale and wind-down process.

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

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