Hostess Brands, the wholesale maker and distributor of Twinkies, will fight the U.S. Trustee’s argument that the company’s bankruptcy plan is extremely favorable to its management.
In a court filing, the U.S. Trustee who oversees bankruptcy cases said it is against the company’s plan because of the improper bonuses that will be given to the managers.
The plan includes giving senior managers bonuses so that they will remain throughout the winding down. If the company’s plan is approved, the managers will receive as much as 75 percent of their yearly salary.
U.S. Trustee Tracy Hope Davis decided to ask Judge Robert Drain at a hearing on Monday to assign an independent trustee who will look after the sales of Hostess’ assets.
Some of the unions are also against the plan, because it would cut the ability of the remaining employees to use vacation and sick leaves.
The 82-year old company has 18,500 workers. It said its operations had been greatly affected by a bakers strike. The management believes that winding down operations can save its shrinking funds.
Last week, Hostess’ operations at all of its plants nationwide were suspended as it started selling assets.
The company’s popular products, such as Twinkies and Wonder Bread, are probably going to be sold to rival companies and the money will go to the creditors of Hostess.
Hostess filed Chapter 11 bankruptcy in January, blaming unmanageable debt and burdensome pension and salary obligations for its financial problems. A strike by workers who are members of a union made it impossible for the company to reorganize its finances and continue operating, according to Hostess.
But officials of the union and line workers said there was already an agreement about a series of concessions in the past years. They also said Hostess did not invest in advertising, replacing trucks and improving plants, instead the management focused on enriching owners like Ripplewood Holdings, Monarch Alternative Capital, and Silver Point Capital.
The three firms refused to comment on the matter.
-To ensure the best possible outcome of your case, you should hire an experienced bankruptcy lawyer. Bankruptcy San Antonio Attorneys focus their practices on this specialized area of the law. They are knowledgeable about the bankruptcy process.