Judge’s order explicit on union contracts

by Josh Sosland
Share This:
Search for similar articles by keyword: [Hostess Brands]

WHITE PLAINS, N.Y. – In an order authorizing the sale of the largest part of the Hostess snack cake business, a bankruptcy court judge said the transaction will be “free and clear, to the fullest extent available” of all claims, including those in connection with labor agreements.

The listing of the various labor claims was included in the order signed March 19 by Judge Robert D. Drain, U.S. Bankruptcy Court, Southern District of New York.

In addition to debts and liens, Judge Drain said the sale would be free and clear of claims including employee benefit plans, multiemployer plans and debtors’ collective bargaining agreements.

The listing was included within the 210-page order, approving the sale to buyers affiliated with Apollo Global Management L.L.C. and Metropoulos & Co. Judge Drain said any remaining such claims will be limited to the proceeds of the sale by the Hostess debtors.

“Those holders of claims who did not object (or who ultimately withdrew their objections, if any) to the sale transaction or the sale motion are deemed to have consented pursuant to section 363(f)(2) of the Bankruptcy Code,” Judge Drain said. “Those holders of claims who did object that have an interest in the cake business assets fall within one or more of the other subsections of section 363(f) of the Bankruptcy Code and are therefore adequately protected by having their claims that constitute interests in the cake business assets, if any, attach solely to the proceeds of the sale transaction ultimately attributable to the property in which they have an interest, in the same order of priority and with the same validity, force and effect that such holders had prior to the sale transaction, subject to any defenses of the debtors.”

The judge used similar language in approving the transfer of assets free and clear:

“Except as otherwise provided in the purchase agreement, all governmental units (as defined in sections 101(27) and 101(41) of the Bankruptcy Code) and all persons and entities (and their respective successors and assigns), including, without limitation, all debt security holders, equity security holders, governmental, tax and regulatory authorities, lenders, employees, former employees, pension plans, multiemployer pension plans, labor unions, trade creditors and any other creditors holding claims, except for assumed liabilities and transferred exceptions, are hereby forever barred, estopped and permanently enjoined from asserting or pursuing any claims against the purchaser, its affiliates, successors or assigns, its property or the cake business assets, including, without limitation, taking any of the following actions with respect to a claim (other than an assumed liability or transferred exception): (a) commencing or continuing, in any manner, any action or other proceeding against the purchaser, its affiliates, successors or assigns, assets or properties; (b) enforcing, attaching, collecting or recovering, in any manner, any judgment, award, decree, or order against the purchaser, its affiliates, successors or assigns, assets, or properties; (c) creating, perfecting, or enforcing any liens, claims, encumbrances or other interests against the purchaser, or its affiliates, successors, assigns, assets or properties; (d) asserting a claim as a setoff, right of subrogation or recoupment of any kind against any obligation due the purchaser, or its affiliates, successors or assigns; or (e) commencing or continuing any action in any manner or place that does not comply, or is inconsistent, with the provisions of this sale order or the agreements or actions contemplated or taken in respect thereof,” he said. “No such governmental units, persons or entities shall assert or pursue against the purchaser or its affiliates, successors or assigns any such claim, except for assumed liabilities and transferred exceptions.”

Similar language is included in the Beefsteak brand approval by Judge Drain.

In the orders, the judge recognizes the need for the transactions to be completed quickly.

“In light of the exigent circumstances of these Chapter 11 cases and the risk of deterioration in the value of the cake business assets pending the proposed sale transaction, time is of the essence in: (a) consummating the sale transaction; (b) preserving the viability of the cake business; and (c) minimizing the widespread and adverse economic consequences for the debtors’ estates and their creditors, that would be threatened by protracted proceedings in these chapter 11 cases,” the judge said. “In order to maximize the value of the debtors’ assets, it is critical that the sale and assignment of the cake business assets occur within the time constraints set forth in the purchase agreement.”

Add a Comment
We welcome your thoughtful comments. Please comply with our Community rules.








The views expressed in the comments section of Baking Business News do not reflect those of Baking Business News or its parent company, Sosland Publishing Co., Kansas City, Mo. Concern regarding a specific comment may be registered with the Editor by clicking the Report Abuse link.


READER COMMENTS (4)

By bob 4/5/2013 1:24:32 PM
loading 2 different trucks to bring product to the stores was a good talking point. BUT the facts are most of the product bread and cake would NOT fit on one truck especially in metro areas the company knows this but chose this talking point as a deversion to the facts. plus. in the northeast they already consolidated routes that could hall both products. but once again sheeple believe what is told instead of getting hard facts. even in the knew the contract that WAS approved by the teamsters clearly states bread and cake would be consolidated were applicable.

By Common Sense 3/24/2013 1:49:44 AM
Read it again. It only says the sale sahll be free and clear. In other words the debts do not go with the sale. It is all part of the bankrupcty. You guys want the new companies to start with some one else's debt that the majority was caused by stupidity on EVERYONE involveds part. Yes the union too. When you fore a company to send two trucks to the same place to delivery goods from the same company, no wonder they couldnt survive! Hopefully the new owners will avoid employees like you who only worry about themselves. If everyone makes the companies bottom line their priority then companies survive and flourish not go under because the union wanted to double the number of jobs by forcing a company to do such incredibly stupid things.

By george 3/23/2013 6:24:07 AM
Thats right bend over the 18500 hard working past employees ,you are going to get screwed again. So it looks like the investors and upper management that put Hostess under will see a nice size profit. Just wondering how much more greed does these people want. I know I have worked my butt off for what I have and will again. I know I will not screw thousands of people to get richer. God Bless you all greedy leeches.

By former employee 3/20/2013 10:24:54 PM
These orders from the bankruptcy judge. Look like he/the governments court. Is robbing and stealing from all the hard working and dedicated former employees, whom loved Wonder Bread/Hostess Cakes. Just as bad as Rayburn and associates. God help this new heartless society. Greed at it's finest!