| LOS ANGELES
LOS ANGELES May 9 Hostess Brands Inc said it
expects several interested parties to submit bids for the
bankrupt maker of Twinkies by Wednesday's deadline.
"There are interested parties. Bids are due today," said a
spokeswoman for Hostess, which late last week warned all of its
18,500 employees they may be laid off.
Potential investors in the privately-held company were not
Hostess mailed out notices in accordance with the federal
WARN Act that requires companies to give employees 60 days
notice before closing a facility or ordering mass layoffs.
"It was a legal requirement to notify employees if a change
of employment, sale or a wind down is possible in the future,"
the spokeswoman said, but added that it does not mean that any
of those events is definitely happening.
"Our goal is to emerge from bankruptcy as a growing company
with a strong future, one that continues to provide good jobs
with competitive wages and benefits," she said.
Hostess's fate relies largely on the outcome of its search
for new capital as well as its labor negotiations.
Last week, Hostess was given the go-ahead by a bankruptcy
judge to reject certain union contracts and modify some retiree
benefits, as it tries to work its way out of its second
bankruptcy in less than a decade.
Hostess can now reject some agreements with the Bakery,
Confectionery, Tobacco Workers and Grain Millers International
Union (BCTGM), as it tries to cut crippling legacy costs
associated with its pension plans and massive debt levels.
But the judge said some contracts that had expired under
which the union is still operating, cannot be modified or
rejected by the company. Hostess and the BCTGM union are arguing
about the expiry date of some of the agreements.
A hearing to determine the validity of the contested
agreements will be held on May 16. On May 14, another hearing
will be held on Hostess's attempt to reject the Teamsters
collective bargaining agreement, which covers 7,500 employees.
Hostess filed for Chapter 11 protection in January. As part
of its reorganization, the company has withdrawn from
multi-employer pension plans, bringing down its cost of
long-term worker benefits and altering the terms of its various
collective bargaining agreements.
Hostess, founded in 1930, has about $860 million in debt. It
operates around 36 bakeries. The company filed for its first
bankruptcy in 2004, citing declining sales, rising ingredient
costs, excess capacity and high worker benefit expenses. It
tackled some issues - closing bakeries and simplifying some
union contracts -- but failed to adequately deal with its huge
pension and health obligations.
Other bankrupt companies, like AMR Corp, parent
of American Airlines, are battling trade unions to cut costs.
The case is In re: Hostess Brands Inc, U.S. Bankruptcy Court,
Southern District of New York, No. 12-22052.