http://www.zerohedge.com/news/2012-11-21/goodbye-hostess
Submitted by Tyler Durden on 11/21/2012 15:35 -0500
Jones Day None Perella Weinberg Unemployment Unemployment Benefits
Everyone loses:
HOSTESS JUDGE APPROVES MOTION TO WIND DOWN COMPANY
HOSTESS WINS APPROVAL TO CLOSE AND BEGIN SELLING ASSETS
Next up: the Twinkie economy.
Fom Leveraged Loan:
U.S. Bankruptcy Judge Robert Drain this afternoon approved Hostess Brands’ emergency wind-down plan, as well as an amendment to its debtor-in-possession credit agreement that will allow Hostess to access the full amount of its $75 million DIP loan during its liquidation.
Drain also denied a motion filed by the U.S. Trustee to convert the case to Chapter 7, though he did not rule out the prospect of a conversion at a later date.
Hostess returned to the bankruptcy courthouse in White Plains, N.Y., this morning after a last-minute mediation yesterday between the company and its main bakers’ union failed to produce a settlement to halt liquidation of its assets. The hearing began Monday afternoon, but was delayed shortly thereafter to give the company and the Bakery, Confectionary, Tobacco and Grain Millers Union a final opportunity to engage in mediation to avert the strike the BCT began last week. But by Tuesday evening, Hostess announced that the mediation was “unsuccessful.”
Judge Drain opened today’s hearing with a brief, private chambers conference to discuss the mediation, the details of which remain confidential.
Back in open court, Hostess financial advisor Joshua Scherer, of Perella Weinberg, took the witness stand to discuss the company’s failed efforts to sell the company as a whole, and the status of its newly launched liquidation strategy.
During its Chapter 11, Hostess fielded six bids for the sale of the company as a whole, none of which passed muster, Scherer said.
In the past five days, however, since Hostess officially launched its liquidation process, the company has received “a flood of inquiries,” said Hostess lawyer Heather Lennox, of Jones Day. The company expects to file a number a number of stalking-horse bids for its assets within the next few weeks, she said.
“The number of inbound calls has been surprising, on a number of fronts,” Scherer said. Those inquiries fall into four “buckets,” he explained. Offers have come from regional bakeries, national competitors, customers (such as Wal-Mart, Kroger and Giant Eagle), and a fourth catch-all category, including large consumer products companies. Scherer said the liquidation sale has generated “very significant interest” from international buyers as well.
Many of the buyers were uninterested in the assets when Hostess was weighed down by its union liabilities, he said. “We have very significant momentum right now with, from a selling perspective, positive press,” Scherer said. “It’s critical to maintain momentum and a competitive dynamic.”
“Every day our product is off the shelf, it’s diminishing in value. Our customers get used to selling goods without our brands, and the end-users learn to live without Twinkies and Wonder Bread.”
On the stand, Hostess CEO Gregory Rayburn said he needs to terminate about 15,000 employees today so that they can collect unemployment benefits. Drain approved an employee retention plan that would keep about 3,200 employees on the job during the wind-down process.
