Former Hostess negotiates $21 million payment on $50 million claim

By Kali Hays

New York, Sept. 5 – Old HB, Inc., formerly Hostess Brands, Inc., is seeking approval of a $21 million settlement resolving the claims of Michael Sprick, according to a Sept. 4 motion with the U.S. Bankruptcy Court for the Southern District of New York.

In May 2012, Sprick filed a general unsecured claim of $50 million against Old HB after a company-owned vehicle was involved in an accident with Sprick on his bicycle in Germany, leaving him with significant injuries and forced to reside in a permanent care facility.

Under the settlement, Sprick will release any claims against the company related to the accident and Old HB agreed to a payment of $21 million in either a single lump sum or multiple lump sums plus the value of a stream of periodic payments, according to the motion.

The settlement received conditional approval from the U.S. District Court for the Western District of Virginia in July, but the effectiveness of the agreement is conditioned upon approval by the Bankruptcy Court and a court of “competent jurisdiction” in Germany along with final approval by the District Court.

Old HB said the settlement will not require any “out-of-pocket” expenses as the company’s multiple automobile liability insurance policies will cover the settlement amount, according to the motion.

The company will present the settlement in Bankruptcy Court Sept. 25.

Hostess Brands, an Irving, Texas-based operator of regional bakeries, filed for bankruptcy on Jan. 11, 2012. Its Chapter 11 case number is 12-22052.

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