Interstate Bakeries granted one-month exclusivity extension to explore alternatives, possible asset sale

By Caroline Salls

Pittsburgh, Oct. 3 - Interstate Bakeries Corp.'s exclusive period to file a plan of reorganization was extended to Nov. 8 by the U.S. Bankruptcy Court for the Western District of Missouri, and the company plans to use the extra time to explore all restructuring alternatives, including a possible sale, according to a company news release.

The exclusive plan vote solicitation period was extended to Jan. 7, and the company said it is still on track to exit the Southern California break market by Oct. 20 as planned.

The exclusive plan-filing period was previously set to expire on Oct. 5 and the solicitation period on Dec. 5.

According to the release, the company said at the exclusivity extension hearing Wednesday that it still believes its best alternative for maximizing value for all of its stakeholders is to emerge from bankruptcy as a stand-alone company.

However, to meet its fiduciary responsibility to all of its constituents, the company said it will use the 30-day exclusive plan-filing period to explore all other alternatives for maximizing the value of its bankruptcy estates, including a potential asset sale.

In addition, Interstate said it was disappointed that it has been unable to reach an agreement with the International Brotherhood of Teamsters on its business plan.

"We continue to believe the best alternative for saving 25,000 IBC jobs and meeting our fiduciary responsibility for maximizing recovery for our creditors is to reach a mutually acceptable agreement with the Teamsters that enables rational financing to fund our business plan, " Interstate chief executive officer Craig Jung said in the release.

"However, time is running out. Our current debtor-in-possession financing agreement expires on February 9, 2008.

"Bottom line, if the Teamsters want to help save our company and its members' jobs, they need to move quickly."

As previously reported, the company reached an agreement with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union leadership on Sept. 28, which is subject to union member ratification.

However, the company needs to reach agreements with both the Bakery workers union and the Teamsters.

"The management team and I regret that we have not achieved the changes we needed with the Teamsters that would allow IBC to emerge as a stand-alone company prior to today's hearing," Jung said in the release.

The Kansas City, Mo., bakery operator filed for bankruptcy on Sept. 22, 2004 in the U.S. Bankruptcy Court for the Western District of Missouri. Its Chapter 11 case number is 04-45814.

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