Milling & Baking News - September 28, 2004 - 9

B U S I N E S S

Judge orders Smith Cookie Co.
to halt Archway production
MCMINNVILLE, ORE. - A court order
has stopped Smith Cookie Co. from
manufacturing and distributing Archway brand products, which it has done
since 1956.
Archway Cookies, L.L.C., an affiliate
of Parma, Italy-based Parmalat, wants
to terminate a licensing contract that
allows McMinnville-based Smith Cookie
to produce and market Archway brand
cookies in Oregon, Washington, Idaho,
Montana, Alaska and Hawaii.
U.S. District Judge Ancer L. Haggerty
has ruled that, pending trial, Archway
may terminate the licensing agreement
in part because Smith Cookie Co. labeled
cookie packages "Archway Cookies, Inc.,
Mfg. By Smith Cookie Company" rather
than "Licensed by Archway Cookies,
Inc., Battle Creek, Mich."
Smith Cookie disputes that it has
violated the licensing agreement in any

way, said Brian Posewitz an attorney
from Tonkon Torp, L.L.P., Portland,
Ore., who is representing Smith
Cookie. The labels the
cookie company uses
for Archway packages were reviewed
and approved by
Archway, but the approval happened before
Parmalat acquired Archway in
2000, Mr. Posewitz said.
A trial concerning the license agreement is set for Nov. 1, 2005.
Smith Cookie halted production of
Archway cookies on Sept. 10. It is appealing the court order, which resulted
in the loss of jobs at the McMinnville
manufacturing plant and for route salespersons.
U.S. Bakery, Portland, owns the McMinnville bakery and leases it to Smith

Groups oppose Penn Traffic reorganization
plan; say proposal lacks sufficient details
SYRACUSE, N.Y. - The reorganization plan filed by Penn Traffic Co. in
U.S. Bankruptcy Court for the Southern District of New York in August
has drawn criticism from an insurance
group and two pension plans that
claim that the disclosure statement
provides insufficient details, prompting the groups to request that Judge
Adlai S. Hardin Jr. reject the proposal.
"Basically, there is no information
in the disclosure statement," said Michael J. Venditto, a Manhattan-based

lawyer representing Central States,
Southeast and Southwest Areas Pension Fund. "There's not sufficient
disclosure on how this will impact on
creditors."
The other groups protesting the
proposal are New York State Teamsters Conference Pension & Retirement Fund, and ACE American
Insurance Co. and Pacific Employers
Insurance Co.
As part of its plan, Penn Traffic said
it would repay in full about $26 mil-

S.E.C. unlikely to pursue enforcement
action against Kraft in Fleming inquiry
NORTHFIELD, ILL. - Kraft Foods
Inc. said it has been informed by the
Securities and Exchange Commission
that the S.E.C. does not plan to recommend an enforcement action against
the company in connection with the
agency's investigation of Lewisville,
Texas-based Fleming Cos., Inc.
"Kraft cooperated with the Commission in its investigation, and we
appreciate the full and fair opportunity that the staff gave us to present
our views on the merits and to describe Kraft's compliance programs
in this important area of the law,"
said Marc Firestone, executive vicepresident and general counsel, Kraft.
"We are pleased that the Commission
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staff is not recommending any action
against us."
Earlier this month, the S.E.C.
reached a settlement with Fleming for
securities fraud and other violations
arising from material earnings overstatements during late 2001 and the
first half of 2002 (see Milling & Baking
News of Sept. 21, Page 30).
At that time, the S.E.C. also said
it had reached a $25,000 settlement
with John K. Adams, a region manager for Kraft Foods in Dallas during
the relevant periods. A spokesperson
for Kraft said Mr. Adams, who is no
longer with the company, settled privately with the S.E.C. and that Kraft
has been cleared of any violations. MBN

Cookie. If the termination is not reversed
on appeal or otherwise, U.S. Bakery likely will use the bakery to make products
that do not have the Archway brand, Mr.
Posewitz said. That action would give
jobs to some of the people who work
in the bakery now. About 35
to 40 bakery personnel
and 30 route drivers,
however, would lose
their jobs.
"If the termination
is not reversed on
appeal or otherwise,
Smith will likely cease to
exist," Mr. Posewitz said.
Smith Cookie wants compensation if
Parmalat is able to take away the Archway brand.
Archway, Mother's Cookies and
Mrs. Alison's brands belong to the
U.S. baking business of Parmalat. The
Italian company has acknowledged its
intent to sell the U.S. baking business
(see Milling & Baking News of Dec. 23,
2003, Page 11). MBN

lion to its post-petition secured lenders and will cancel its existing 20 million shares of common stock. It then
will reorganize and issue new stock to
unsecured creditors who have claims
totaling $277 million.
But both pension funds say it's unclear how they will be dealt with as
Penn Traffic reorganizes and emerges
from bankruptcy protection. In addition, the funds have objected to the
way Penn Traffic is consolidating its
debts into one lump sum.
Central States claims that Penn Traffic has not provided enough detail on
each individual debtor, what they are
owed and how much they will be paid
under the reorganization plan.
Penn Traffic and its U.S. subsidiaries, including Penny Curtiss Baking
Co., filed for Chapter 11 protection
May 30, 2003, with debts totaling $337
million. It expects to emerge from
bankruptcy with about $88 million in
debt, the company said. MBN

Bakery worker dies
CINCINNATI - A 22-year-old factory
worker died Sept. 17 at a Klosterman
Baking Co. plant in Cincinnati.
The Cincinnati Enquirer listed electrocution as the cause of death for
Jonathan Payne of Goshen, Ohio.
Klosterman Baking Co. had yet to release a statement or comment on the
death as of Sept. 22. MBN

Milling & Baking News, September 28, 2004 / 9

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Milling & Baking News - September 28, 2004

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