KANSAS CITY — Interstate Bakeries Corp. on Monday said it has not been able to reach agreement with the International Brotherhood of Teamsters on modifications to its collective bargaining agreements necessary to allow a more capable and cost-effective path-to-market, specific health and welfare concessions, and increased work rule flexibility.
The announcement comes three days after I.B.C. said it reached an agreement with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, and that it believed the ratification process was under way.
Interstate Bakeries previously said that if agreements with its two principal labor unions were not reached by Sept. 30, it would seek interim Bankruptcy Court approval for a 30-day extension to give it extra time to determine the maximum value of its assets.
A hearing on the matter is scheduled for Oct. 3.
The company said it remains open to talks with the Teamsters until the hearing on Oct. 3. In addition, I.B.C. said it is continuing discussions with prospective investors to secure the financial resources required to successfully emerge from bankruptcy and implement its business plan. However, all financing proposals I.B.C. has received thus far require union alignment to the company’s business plan, I.B.C. said.
If union and financing arrangements are not achieved by Oct. 3, I.B.C. said it will pursue Bankruptcy Court approval of the extension and focus efforts on alternative plans to maximize the value of the bankruptcy estates.
Last week, the Teamsters asked the U.S. Bankruptcy Court in Kansas City to deny I.B.C.’s request for more time to develop its reorganization plan.
In a Sept. 26 filing with the Bankruptcy Court, the Teamsters, which represent about 10,000 of I.B.C.’s 25,000 employees, said the maker of Twinkies and Wonder Bread has had more than enough time over the past three years to develop a reorganization plan.
"Like a beached whale, these large debtors are going nowhere," the Teamsters said in their filing.
Interstate Bakeries, which has until Oct. 5 to explain how the company plans to exit bankruptcy, earlier this month asked the Bankruptcy Court to extend the deadline to Jan. 15, saying it was talking with lenders interested in providing post-bankruptcy funding but those discussions hinged on reaching agreement with its two top unions by Sept. 30.
If those agreements aren’t possible, the company said it needed 30 extra days to work out a new plan for the company, which could include liquidation.
The Teamsters said the court should hold I.B.C. to the current Oct. 5 deadline and allow others, including lenders and unsecured creditors, to introduce reorganization plans of their own.
Teamsters officials said that One Equity Partners, a firm affiliated with J.P. Morgan, and Yucaipa Companies, an investment company led by Los Angeles-based billionaire Ron Burkle, are interested in investing in the company. But I.B.C. hasn’t seriously considered either company because they will not sign agreements prohibiting them from talking with the unions, which also includes the Bakery, Confectionary, Tobacco and Grain Millers Union.