Former Hostess wins approval of Kansas workers compensation settlement

By Caroline Salls

Pittsburgh, June 11 – Old HB, Inc., formerly Hostess Brands, Inc., obtained approval of a settlement with the State of Kansas Department of Labor, Division of Workers’ Compensation regarding the return of proceeds under a $1.1 million letter of credit, according to an order filed June 10 with the U.S. Bankruptcy Court for the Southern District of New York.

The company provided the letter of credit to the state division before it filed for bankruptcy in order to secure workers’ compensation claims. After Old HB ceased payment on all workers’ compensation claims in 2013, the state division drew on the letter of credit. Any remaining amounts from the letter of credit are being held in a trust controlled by the state division.

Under the settlement, the state division agreed to release $534,000 in proceeds from the letter of credit that “are no longer required for satisfaction of the debtors’ workers compensation liabilities under the laws of the State of Kansas.”

According to the motion, all workers compensation claims in Kansas against Old HB will be deemed satisfied and the settlement parties agreed to release any and all claims against one another.

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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