KANSAS CITY — Even while admitting that "significant issues remain unresolved," Interstate Bakeries Corp. said in a Sept. 2 filing with the Securities and Exchange Commission that it is in the final stages of negotiating a plan of reorganization and related financing.
"Recent negotiations have narrowed issues among parties with respect to terms of a plan of reorganization," I.B.C. said in a Sept. 2 S.E.C. filing. "As a result, our board of directors is hopeful that the required parties will reach agreement within the next few days, permitting our 2008 Form 10-K to be completed on a ‘going concern’ basis and filed by Sept. 15."
The announcement comes a little more than two weeks after the International Brotherhood of Teamsters said it helped broker a deal that would allow the troubled baking company to emerge from bankruptcy.
In the S.E.C. filing, I.B.C. said the potential plan would enable the company to emerge from Chapter 11 as a standalone entity rather than having to liquidate. I.B.C. has been operating under bankruptcy protection since Sept. 22, 2004.
Despite the hint of optimism that an agreement may be reached, I.B.C. cautioned about potential hurdles of any such deal coming to fruition.
"At the same time, a final plan of reorganization requires comprises from many constituencies, and it is possible that a final agreement may not be realized," I.B.C. said. "Lenders under our debtor-in-possession credit facility have stated that reaching an agreement-in-principle with the proposed equity sponsor of the plan of reorganization is a condition precedent to their agreement to extend the term and increase amounts available to use under the DIP facility."
I.B.C. added that "significant issues remain unresolved and, accordingly, no assurance can be given at this time that the parties will be successful in finalizing and implementing such agreements, including the extension and increase of DIP facility on a timely basis."
While participants in the negotiations have been tight-lipped about the proceedings, the Teamsters issued independent statements in late August on two occasions, first blaming creditors for a lack of progress in negotiations and then declaring a breakthrough that was not confirmed by other parties involved.
In the first statement, the Teamsters asked creditors, led by Monarch Alternative Capital and JP Morgan, "to work with investor Ripplewood Holdings to help the company emerge from bankruptcy with its thousands of good-paying jobs protected."
Ripplewood Holdings emerged as a potential bidder for I.B.C. earlier this year. At the time, the Teamsters and Ripplewood were working on a labor agreement. Such an agreement is considered crucial for the successful emergence of I.B.C., which has said its byzantine complex of labor contracts stands as a major impediment to its future viability. The Teamsters in late August said it has reached such an agreement with Ripplewood, a pact it said "balances the needs to help bring I.B.C. out of bankruptcy with the needs of workers who have made so many sacrifices over I.B.C.’s long bankruptcy proceedings."
While Ripplewood has been working toward finalizing an exit plan, the Teamsters said secured creditors had "balked at the proposal" at the 11th hour. The union accused the creditors of "toying with the livelihoods of thousands of I.B.C. workers."
On Aug. 21, the union said a deal was reached between the creditors and Ripplewood after Teamsters representatives "worked through the night" to hammer out an agreement.