Teamsters push I.B.C. creditors on Ripplewood deal
August 20, 2008
by Josh Sosland
WASHINGTON — Nearly four years after Interstate Bakeries Corp. first filed for bankruptcy protection, the Teamsters Union this week urged secured creditors to help the troubled baking company emerge from bankruptcy.
In a 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 (see Milling & Baking News of March 25, Page 1). 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 this week 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 are "balking at the proposal" at the 11th hour. The union accused the creditors of "toying with the livelihoods of thousands of I.B.C. workers."
The Teamsters has been vocal in opposition of current I.B.C. management and has worked to find alternative proposals to the company’s reorganization plan.
"Our goal has been the preservation of our members jobs at I.B.C.," said Richard Volpe, director of the Teamsters bakery conference. "Through countless meetings and an enormous amount of effort, we have now gotten close to a proposal that could ensure, as best we can, the long-term viability of I.B.C. Throughout this bankruptcy we’ve indicated our willingness to work with financial partners that value all of the prior and prospective sacrifices of Teamster members, and the Ripplewood proposal meets those objectives.
"We are holding out little hope that this proposal will be approved. These banks and hedge funds are once again going to disappoint all of the 23,000 employees of Interstate, just like they have disappointed the nation with the mortgage debacle."
Mr. Volpe said "severe consequences" loom absent a reorganization plan soon and said creditors in such an event would "likely recover far less than under the Ripplewood proposal."