Bankrupt Twinkie maker likely to face liquidation

Bankrupt Twinkie maker likely to face liquidation The ongoing bankruptcy saga of Interstate Bakeries Corp., maker of such lunch staples as Twinkies and Hostess snack cakes, may have come to a final and unhappy end Monday.
   The bankrupt bakery firm had until Monday to file a new reorganization plan, including support from its unions, or prepare to liquidate its assets.
   However, an agreement from at least one of the two primary unions representing IBC workers is unlikely to be reached.
   The International Brotherhood of Teamsters, which along with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, represents about 20,000 of the 25,000 IBC employees, have repeatedly said they would prefer to see IBC liquidated rather than agree to wage and benefit concessions demanded by IBC. Last summer, the two unions had agreed to some wage and benefit cuts to help Interstate pull out of bankruptcy, however, both unions said at the time that Interstate's demands were unreasonable.
   The Kansas City, Mo.-based IBC filed for protection from creditors in September 2004, citing rising labor costs and declining sales.
   Talks continue between IBC and two potential investor groups prepared to bailout the bakery firm, but two previously interested investors — Los Angeles-based hedge fund Yucaipa Cos. and Mexico City-based rival Grupo Bimbo — have withdraw from the talks.
   Still talking with IBC are Silver Point Financing LLC and Ripplewood Holdings, a New York-based hedge fund.
   A previous $400 million bailout of IBC by Silverpoint, which required steep concessions from the unions, fell apart after the Teamsters refused to consider the proposals. Talks between IBC and the Teamsters broke off in October 2007 and have not resumed.
   IBC officials said that if they could not reach a deal with the unions by Monday — something both sides agreed was unlikely — the firm will present a liquidation schedule to its lenders.
   While industry experts believe the Twinkie and Hostess products will survive with or without Interstate, the Wonder Bread label, a staple of children's lunch boxes for nearly 80 years, might be another story. At the end of August 2007, Interstate eliminated the Wonder Bread brand from Southern California shelves, closed four Southern California production facilities and laid off nearly 1,300 local workers.