Interstate gets final 30 days to settle with union

By Carey Gillam

KANSAS CITY, Missouri (Reuters) - A U.S. bankruptcy judge on Wednesday gave Interstate Bakeries Corp IBCIQ.PK a final 30 days to settle differences with a key union and come up with a plan to begin bringing the maker of Wonder bread and Twinkies snacks out of bankruptcy.

IBC, one of the largest U.S. commercial bakers and distributors of fresh-baked bread and sweet goods, said it has identified at least three potential investors that could help save the company from liquidation, but it must reach agreement with the International Brotherhood of Teamsters on certain issues first.

Teamsters attorney Frederick Perillo said there was little chance the union could reach an agreement with IBC and argued in court that the union should be allowed to talk directly with potential investors immediately. The court should not extend IBC's "exclusivity" window in which parties talking with the bread company are barred from holding separate talks with the unions, Perillo said.

"We believe the only way is to open up the process so everyone can talk to everyone," Perillo said. "There are parties ... willing to engage in that type of constructive dialogue."

One of those parties spoke up in court on Wednesday. Yucaipa Cos. LLC, a Los Angeles-based firm run by billionaire Ronald Burkle, said it was among the investors interested in Interstate. Yucaipa's Robert Klyman told the court the company wanted to be able to negotiate directly with the Teamsters.

Perillo said the Teamsters feared IBC would use the next month to sell off key assets, endangering more jobs. IBC's move to exit the Southern California bread market, which is expected to result in the loss of 1,300 jobs, would make it harder for unions to work out an agreement with the company, he added.

Earlier on Wednesday, IBC received court approval to proceed with its previously announced plan to close down its bread operations in Southern California.

U.S. bankruptcy judge Jerry Venters approved the company's plan to shutter four bakeries, about 10 percent of IBC's bakeries, numerous retail outlets and 18 distribution centers in the region. The operations are slated to end October 20.