NEW YORK -- The future of Twinkies is virtually assured, but not the 18,000 jobs of bankrupt Hostess Brands.
A
federal bankruptcy judge approved wind-down plans late Thursday for the
maker of Twinkies, Ding Dongs and Ho Hos. That included approving
bonuses worth up $1.8 million if top executives meet certain liquidation
goals.
And it sets the stage for the company to find a second
life with new owners. Hostess said in court that it's in talks with 110
potential buyers for its brands.
The suitors include at least
five national retailers, such as supermarkets, a financial adviser for
the company said. The process has been "so fast and furious" Hostess
wasn't able to make its planned calls to potential buyers, said Joshua
Scherer of Perella Weinberg Partners.
"Not only are these buyers serious, but they are expecting to spend substantial sums," he said.n a hearing in the U.S. Bankruptcy Court in the Southern District of
New York in White Plains, N.Y., company lawyers said the bonuses are
needed to retain the 19 corporate officers and "high-level managers"
during the wind down process, which could take about a year.
Two
of those executives would be eligible for additional rewards depending
on how efficiently they carry out the liquidation. The compensation is
in addition to regular pay.
The bonuses do not include pay for CEO
Gregory Rayburn, who was brought on as a restructuring expert earlier
this year. Rayburn is being paid $125,000 a month.
In court
Thursday, an attorney for Hostess noted that the company is no longer
able to pay retiree benefits, which come to about $1.1 million a month.
Hostess stopped contributing to its union pension plans more than a year
ago.
Hostess was given approval on an interim basis for its
wind-down last week, which gave the company legal protection to fire
15,000 union workers. The company said the immediate terminations were
necessary to free up workers to apply for unemployment. Hostess is
retaining about 3,200 employees to help in winding down operations,
including 237 employees at the corporate level.
The bakers union,
Hostess' second-largest union, has asked the judge to appoint an
independent trustee to oversee the liquidation, saying that the current
management "has been woefully unsuccessful in its reorganization
attempts."
Hostess had already said last week that it was getting a
flood of interest from potential buyers for its brands, which also
include Devil Dogs and Wonder bread. The company has stressed that
moving quickly is necessary to capitalize on the outpouring of nostalgia
sparked by its liquidation.
"The longer these brands are off the
shelves, the less they're going to be valued," Scherer said in a court
Thursday. Last week, he had noted that it was a "once-in-a-lifetime
opportunity" for buyers to snap up iconic brands without the burden of
debt and labor contracts that would come with the purchase of Hostess as
a company.
Although Hostess sales have been declining over the years, they still come in at between $2.3 billion and $2.4 billion a year.
The
company's demise came after years of management turmoil, with workers
saying the company failed to invest in updating its products. In
January, Hostess filed for its second Chapter 11 bankruptcy in less than
a decade, citing steep costs associated with its unionized workforce.
Although
Hostess was able to reach a new contract agreement with its largest
union, the Teamsters, the bakers union rejected the terms and went on
strike Nov. 9. A week later, Hostess announced its plans to liquidate,
saying the strike crippled its ability to maintain normal production.
Toward
the end of the hearing Thursday, a man who said he'd worked at Hostess
for 34 years stood to give his objections to the wind-down plan, saying
creditors shouldn't be given money from brand sales when the company
hasn't been paying into workers' pension funds.
"I have traveled
pretty far to get here," he said, noting that many of his co-workers
weren't aware of the hearing or didn't know how to get there. "I just
wanted to be heard."
Associated Press