Interstate Bakeries Gets Strategy Extension
A bankruptcy judge on Wednesday gave Interstate Bakeries and its largest union 30 more days to either work out their differences or develop plans for the company's future, including a possible sale.
U.S. Bankruptcy Judge Jerry Venters granted a request from the Kansas City-based maker of Hostess Twinkies and Wonder bread to extend the deadline for filing its reorganization plan from Friday to Nov. 7.
"We've been here three years and a few days on this case and another 30 days won't hurt a whole lot," Venters said. "I hope everybody will lay their weapons down and give this thing a shot."
Attorneys for Interstate Bakeries, which filed for Chapter 11 protection in September 2004, had wanted to extend the deadline to Jan. 15 to develop a plan for exiting bankruptcy. But they asked for a shorter period Wednesday after being unable to reach an agreement with the company's largest union, the Teamsters, over health and welfare concessions and a proposed revamping of the company's distribution system.
They said they would use the time reviewing options that would maximize value for the company's creditors, including a sale of the company as a whole or in parts.
The Teamsters asked Venters to reject the company's request for an extension, saying three years was more than enough time to develop a plan and he should allow other players a chance to propose their own plans for the company's future.
Frederick Perillo, an attorney for the Teamsters, said he wasn't optimistic about an agreement and that Venters should remove conditions requiring potential investors to sign confidentiality agreements preventing them from negotiating directly with the union.
In court filings, Interstate Bakeries said it had received interest from a number of parties willing to invest in the company once it got out of bankruptcy. But those agreements hinged on the company being able to get its top two unions to agree to a number of concessions.
The company last week was able to reach a tentative agreement with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which is currently having its roughly 9,000 members vote on the new contract.
But the company has not been able to come to terms with the Teamsters, which represents about 10,000 employees. The union has objected to the concessions, as well as Interstate Bakeries' plan to redesign its product distribution system.