Milling & Baking News - October 9, 2007 - 12

Business

I.B.C. receives 30-day extension
to settle with union
Continued from Page 1

from bankruptcy as a stand-alone
company. The company said it will
use the 30-day period "to pursue all
other alternatives for maximizing
the value of its bankruptcy estates,
including a potential sale of the
company in its entirety or in a series
of transactions."
The company said it was disappointed that, to date, it has been
unable to reach alignment with the
Teamsters on its business plan, especially in light of reaching agreement on Sept. 28 with its second

and brands during the bankruptcy.

In tussle with Teamsters, lenders
Judge Venters' decision to extend
the deadline came a week after 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 a Sept. 26
filing. The Teamsters said the court
should hold I.B.C.
'The management team and
to the Oct. 5 deadI regret that we have not
line and allow othachieved the changes we
ers, including lendneeded with the Teamsters
ers and unsecured
creditors, to introthat would allow I.B.C. to
duce
reorganizaemerge as a stand-alone
tion plans of their
company prior to today's hearing.'
own.
- Craig Jung, chief executive officer, I.B.C.
Responding
to
the Teamsters objection, I.B.C. dislargest union, the Bakery, Confec- puted the assertion it had not made
tionery, Tobacco Workers and Grain much progress in the last seven
Millers International Union. The months and is not likely to make
B.C.T.G.M.'s 9,000 members are in much progress in the future.
"This is untrue," I.B.C. stated in
the process of voting on the new
an Oct. 1 filing. "As the Teamsters
contract.
"The management team and I know from their membership on the
regret that we have not achieved committee, the debtors have made
the changes we needed with the tremendous progress on every maTeamsters that would allow I.B.C. jor front since the beginning of this
to emerge as a stand-alone compa- calendar year, when a new board
ny prior to today's hearing," said of directors and management were
Craig Jung, chief executive officer, installed, including with respect to
I.B.C. "While we negotiated hard their operations, human resourcto win critical modifications to our es, exit financing and labor issues.
collective bargaining agreements Ironically, the only area where progthat would have created sustain- ress has not been made despite the
able competitive advantage and, at company's diligent efforts, is with
the same time, provided good jobs the Teamsters themselves, who reat good pay to our employees, our fuse to negotiate in good faith."
Interstate Bakeries also noted that
focus now must be on maximizing
value of the bankruptcy estate, rec- the concessions being asked of the
ognizing that other alternatives may Teamsters are "modest."
"The jobs of roughly one-third of
not protect our employees' jobs or
Teamster-represented
employees
benefits."
Mr. Jung said I.B.C. remains com- will remain basically unchanged
mitted to implementing a broad except those employees will be furprocess to evaluate all available nished with newer technology and
alternatives while day-to-day busi- equipment to make their jobs easiness activities continue. He said er," I.B.C. said. "Other employees
I.B.C. will continue to operate on a will no longer load, unload or drive
normal schedule in order to protect trucks. Rather, they will assume a
the value of the company, its assets more focused sales function and
12 / October 9, 2007

Milling & Baking News

will receive comparable compensation with opportunity for growth
and enjoy a more favorable work
schedule."
The company went on to say that
discussions with the Teamsters have
been unproductive because of attempts "to delay, divert, discredit
and intimidate."
"Rather than engage in constructive discussions regarding the business plan and the impact of and
need for the requested concessions,
the Teamsters have engaged in tactics designed solely to defend the
indefensible," I.B.C. said.
Also objecting to the extension
was JPMorgan, which leads a group
of lenders that were owed $450 million when I.B.C. filed for bankruptcy in September 2004. JPMorgan
stated in its Sept. 28 filing with the
U.S. Bankruptcy Court in the Western District of Missouri that Oct.
31 should be the drop-dead date in
which I.B.C. may file its reorganization plan.
JPMorgan said I.B.C. possesses
"neither sufficient non-core assets
to liquidate nor enough surplus
working capital to support a bleeding business."
Regarding I.B.C.'s request to extend the deadline to Jan. 15 from
Oct. 31, JPMorgan said I.B.C. was
"dead wrong" to request such an
extension based on commitments
to infuse needed equity capital and
union agreements providing for required work rule changes and benefit concessions.
"It is completely unacceptable for
the debtors to have the unilateral
option to extend exclusivity in the
manner proposed," JPMorgan said.
Settlement on Southern California
Also on Oct. 3, Judge Venters
signed a motion allowing I.B.C. to
exit the bread market in Southern
California on Oct. 20. Plants to be
closed are located in Glendale, Pomona, San Diego and Los Angeles.
The company plans to eliminate 325
routes and close 17 distribution centers and 19 outlet stores. Affected by
the closing will be about 1,300 employees.
The decision came even as the
Teamsters, as well as I.B.C.'s unsecured creditors, have argued that
exiting the market could negatively
impact the value that a potential
strategic investor may assign to the
business.
"The debtors never attempted to
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