11/30/07

Judge shields Teamsters, Clinton-crony

A federal bankruptcy judge has denied a request by Interstate Bakeries Corp. to force a group considering a bid for the baker to disclose terms of an agreement with a key union.

The decision Thursday from U.S. Bankruptcy Judge Jerry Venters followed court arguments from Interstate that it needed to know the terms of an exclusive agreement between the International Brotherhood of Teamsters — which represents 9,500 IBC workers — and the U.S. bakery division of Grupo Bimbo and Los Angeles-based investment firm Yucaipa Cos. Grupo Bimbo and Yucaipa are considering a bid for the wholesale baker.

IBC, maker of iconic brands Wonder bread and Hostess Twinkies, has been in bankruptcy reorganization since September 2004. The company argued that it needed to know the terms of the agreement partly because it needed to determine whether there was anything that would violate bankruptcy law. IBC was joined in trying to force the disclosure by the committee representing unsecured creditors.

Additionally, IBC’s attorneys argued that the information being kept secret was having a chilling effect on other potential bidders.

Yucaipa, run by billionaire Ron Burkle, and Bimbo Bakeries USA, based in Fort Worth, Texas, revealed Nov. 2 that the Teamsters would work exclusively with the duo in making an offer for IBC. That news came shortly after the Teamsters broke off talks with IBC, saying it was impossible for them to come to terms over wage concessions and changes the baking company wants to make to its delivery system.

“The process is naturally being derailed and chilled … because one of the potential bidders announces publicly to all others who may or may not be interested in the company, ‘Don’t bother. We’ve locked up nearly half of (the company’s) labor force through the Teamsters that is available to us and nobody else,’ ” said Zachary Rosenbaum, an attorney representing the unsecured creditors. “The natural consensus must be that a prospective bidder who might otherwise be interested in this process would sit on the sidelines.”

But Venters ruled there was no basis to force the disclosure now. He also noted that if Yucaipa and Bimbo make an offer by a Dec. 13 deadline, many of the details IBC seeks will be disclosed at that time.

Meanwhile, Interstate has filed its own reorganization plan and has been promised $400 million in financing if it can get additional concessions from the Teamsters. It has already gained concessions from the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents about 10,000 Interstate employees.

Other parties wanting to make an offer for IBC had to make their intent known to the company by Wednesday. All other bidders besides Yucaipa and Bimbo have a deadline of Jan. 15 to submit proposals. If there are multiple bids, an auction will take place on Jan. 22, and the court on Jan. 29 will give its blessing to the prevailing bid.

(kansascity.com)

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