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Union: Lenders delay Twinkie-maker's reorganization
KANSAS CITY, Mo. (AP) -- The International Brotherhood of Teamsters says lenders are holding up a potential plan for helping Interstate Bakeries Corp. exit almost four years of bankruptcy protection, endangering thousands of jobs.
In a news release, the Teamsters, who represent more than 9,500 Interstate Bakeries workers, singled out JPMorgan Chase Bank and hedge fund Monarch Alternative Capital for blocking the plan the union said it has negotiated with investor Ripplewood Holdings from moving forward.
Interstate Bakeries' current financing package is due to expire on Sept. 30, which could force the maker of Hostess Twinkies and Wonder Bread to liquidate itself.
"Without a reorganization plan in place soon, the company could face severe consequences, and these same institutions will likely recover far less than under the Ripplewood proposal," said Richard Volpe, director of the Teamster's bakery conference.
"We are holding out little hope that this proposal will be approved," Volpe added. "These banks and hedge funds are once again going to disappoint all of the 23,000 employees of Interstate, just like they have disappointed the nation with the mortgage debacle."
Spokespeople for JPMorgan and Monarch declined to comment on the union's claims.
Maya Pogoda, a spokeswoman for the Kansas City-based company, said Interstate Bakeries was not involved in the negotiations between Ripplewood and the secured lenders.
"We're hopeful that the parties will reach agreement on concessions that would allow IBC to emerge from Chapter 11 (bankruptcy protection) as a stand-alone company," Pogoda said.
Interstate Bakeries filed for protection from creditors in September 2004. It developed a reorganization plan late last year but had to abandon it in March when the company was unable to gain workplace and welfare concessions from the Teamsters.
During a bankruptcy court hearing on the plan, a Teamsters attorney said the union would prefer to see the company liquidated to accepting the concessions.
Instead, Interstate Bakeries began negotiating with New York-based Ripplewood, which the Teamsters said had proposed a reorganization plan that included concessions it could accept.
In April, Interstate Bakeries also negotiated a new financing package worth $250 million with JPMorgan, Monarch and three other lenders, due to expire Sept. 30.
The company also said it would begin developing a plan to sell itself whole or in pieces if it ultimately couldn't get a reorganization plan approved.
Since then, the company has provided no update on negotiations and has continued to struggle with rising costs, losing a total of $81.2 million so far this year.