Bumps in road still likely in Hostess liquidation
BakingBusiness.com, Feb. 5, 2013
by Josh Sosland

Does the liquidation of Hostess Brands, Inc. appear to be proceeding too smoothly?

For anyone nervous about what may be coming next, consider this: since Interstate Bakeries Corp. first filed for bankruptcy in September 2004, there have been 35 million births in the United States. A significant portion of the U.S. population has no memory at all of the time when the maker of Wonder Bread and Twinkies was a healthy business, much less a dominant force in its categories. Perhaps a quarter of the employee base of grain-based foods has spent their entire career in an industry in which the former baking leader has been in a wounded state.

Small wonder then that the liquidation process, led by Perella Weinberg Partners, appears to be progressing amazingly well. Qualified, competent buyers have stepped forward as stalking horse bidders. Auction dates have been set. Even the Bakery, Confectionery, Tobacco and Grain Millers Union has been offering remarks supportive of the process heading toward completion.

While maintaining an optimistic view that the liquidation ultimately will be successfully completed, industry observers could not be blamed for expecting another stumble or two along the way. Indeed, the Pipeline has learned that antitrust objections from within the industry are imminent against one of the stalking horse bids selected by Hostess.

Still, sources in the legal community suggest a rapid resolution is possible even if antitrust issues emerge. While recent experience may be different, consent agreements may be reached quickly between acquiring companies and the government when both sides are motivated to make rapid progress. Stumbles may lie ahead, but there are still solid reasons to be hopeful that the outcome of the Hostess liquidation will be highly positive.