Maryland Bankruptcy Attorney Discusses Latest Hostess News

Updating a story we brought you last week, Hostess Brands Inc has forged ahead with its Chapter 11 bankruptcy after it failed to reach an agreement during mediation with one of its labor unions.

According to Reuters, in a filing last week in the U.S. Bankruptcy Court in White Plains, N.Y., lawyers for the union said they objected to allowing “incumbent management” to supervise the company’s liquidation.

Instead, the Bakery, Confectionery, Tobacco and Grain Millers Union is hoping that the court will appoint an independent trustee to oversee Hostess’ bankruptcy liquidation process. According to the AP, “the bakers’ union wants to see an independent outside professional, called a Chapter 11 trustee, installed as the company’s leader.”

An independent trustee in a Chapter 11 bankruptcy case would be unusual, as most Chapter 11 bankruptcies allow a company to remain in control of its day-to-day operations, while it attempts to reorganize.

According to the AP, Judge Robert Drain rejected the idea of an independent bankruptcy trustee to replace Hostess’s managers last week. The AP reported that Drain said that move would be “a disaster for all concerned,” stressing that it would simply take too long for a new leader to get up to speed with a massive organization that faces a ticking clock to find buyers.”

However, the union continues to ask Drain to put an independent trustee in place, claiming that Hostess’ management was unsuccessful in restructuring when it filed for Chapter 11 bankruptcy in the past.

Since the bankruptcy filing, Hostess has closed for business and its case remains in flux, with future court dates set. We will continue to keep a close eye on this case.

Much like a Chapter 11 bankruptcy helps a business, Chapter 13 or Chapter 7 bankruptcies help individuals financially by allowing them to discharge debts like credit card debt and medical bills. Contact our Washington DC and Maryland bankruptcy lawyer now for a free consultation.

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