Hostess Brands Inc, the bankrupt maker of Twinkies and Wonder Bread, filed a reorganization plan that includes wage cuts, reduction in health and welfare benefits and a freeze on pensions for at least two years.
Hostess is seeking to eliminate unsecured claims worth $2 billion to $2.5 billion under the plan and its equity owners may end up losing their investments, the company said in a court filing.
Hostess filed for Chapter 11 bankruptcy protection in January for the second time in less than three years as it struggled with crippling costs associated with its pension plans.
Union and non-union employees will take an 8 percent wage cut and will see only modest hikes in the coming years, the company said.
Health and welfare benefits will also face cuts under the reorganization plan, which needs to be approved by the court.
Hostess, which has 18,000 employees, received court permission earlier this month to impose a pay-cutting collective bargaining agreement on thousands of workers in a bakery union.
"Upon emergence, our union-represented employees will hold a 25 percent equity ownership, a $100 million interest-bearing note and have two seats on the board of directors," said Chief Executive Gregory Rayburn in a statement.
The case is In Re: Hostess Brands Inc, Case No. 12-22052, U.S. Bankruptcy Court, Southern District of New York.
(Reporting by Tanya Agrawal in Bangalore; Editing by Saumyadeb Chakrabarty)