KANSAS CITY — U.S. bankruptcy judge Jerry W. Venters on Wednesday gave Interstate Bakeries an additional 30 days to either strike a deal with its largest union or to develop plans for a possible liquidation of the company’s assets.
Interstate Bakeries’ deadline for filing its reorganization plan had been set for Oct. 5, but Judge Venters granted the Kansas City-based wholesale baker’s request to extend the deadline to Nov. 7. Interstate initially had asked for the deadline to be moved to Jan. 15, but pulled back on that request on Oct. 3 after being unable to come to an agreement with the International Brotherhood of Teamsters, its largest union.
"We’ve been here three years and a few days on this case and another 30 days won’t hurt a whole lot," Judge Venters said. "I hope everybody will lay their weapons down and give this thing a shot."
In its exclusivity motion and again in arguments to the bankruptcy court, I.B.C. reiterated its belief that the company’s best alternative for maximizing value for all of its stakeholders is to emerge from bankruptcy as a stand-alone company. The company said it will use the 30-day period "to pursue all other alternatives for maximizing the value of its bankruptcy estates, including a potential sale of the company in its entirety or in a series of transactions."
The company said it was disappointed that, to date, it has been unable to reach alignment with the Teamsters on its business plan, especially in light of reaching agreement on Sept. 28 with its second largest union, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. The B.C.T.G.M.’s 9,000 members are in the process of voting on the new contract.
"The management team and I regret that we have not achieved the changes we needed with the Teamsters that would allow I.B.C. to emerge as a stand-alone company prior to today’s hearing," said Craig Jung, chief executive officer, I.B.C. "While we negotiated hard to win critical modifications to our collective bargaining agreements that would have created sustainable competitive advantage and, at the same time, provided good jobs at good pay to our employees, our focus now must be on maximizing value of the bankruptcy estate, recognizing that other alternatives may not protect our employees’ jobs or benefits."
Mr. Jung said I.B.C. remains committed to implementing a broad process to evaluate all available alternatives while day-to-day business activities continue. He said I.B.C. will continue to operate on a normal schedule in order to protect the value of the company, its assets and brands during the bankruptcy.
Also on Wednesday, Judge Venters signed a motion allowing I.B.C. to exit the bread market in Southern California on Oct. 20. Plants to be closed are located in Glendale, Pomona, San Diego and Los Angeles. The company plans to eliminate 325 routes and close 17 distribution centers and 19 outlet stores. Affected by the closing will be about 1,300 employees.
The decision came even as the Teamsters, as well as I.B.C.’s unsecured creditors, have argued that exiting the market could negatively impact the value that a potential strategic investor my assign to the business.