Bakers' union seeks Chapter 11 trustee for Hostess liquidation

NEW YORK Tue Nov 27, 2012 8:33pm EST

Signage is pictured at a Hostess Bakery Thriftshop that remains open selling baked goods in Glendale, California November 26, 2012. REUTERS/Fred Prouser

Signage is pictured at a Hostess Bakery Thriftshop that remains open selling baked goods in Glendale, California November 26, 2012.

Credit: Reuters/Fred Prouser

NEW YORK (Reuters) - The bakers' union of Hostess Brands Inc asked the judge overseeing the company's bankruptcy on Tuesday to appoint a Chapter 11 trustee to ensure an orderly wind-down.

In a filing in the U.S. Bankruptcy Court in White Plains, N.Y., lawyers for the union and a related pension fund said they objected to allowing "incumbent management" to supervise the company's liquidation.

Hostess won permission from Judge Robert Drain last week to begin closing down, although it has expressed hope that many of its widely known brands, including Twinkies and Wonder Bread, would survive in the hands of new owners.

The liquidation began after the judge failed in a last-ditch effort to resolve the dispute between Hostess and the striking Bakery, Confectionery, Tobacco and Grain Millers Union, which had refused to accept new wage and benefit cuts after earlier give-backs.

The union asked Drain to rule on its request for a trustee at the next court hearing on Thursday.

In papers filed opposing the request for an expedited decision, lawyers for Hostess said they believed there were "serious legal deficiencies" in the union's motion for a trustee.

Drain has already rejected a request to convert the case into a Chapter 7 liquidation that would be overseen by a trustee, calling it a "disaster" because of the potential delay in selling the company's assets.

Hostess decided to liquidate on November 16, saying it was losing about $1 million per day after the union, representing close to one-third of its workers, went on strike a week earlier.

The 82-year-old company filed for Chapter 11 protection on January 11, its second bankruptcy filing in less than three years.

The case is In re: Hostess Brands Inc et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-22052.

(Reporting by Joseph Ax; Editing by Paul Tait)

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