Bakers' union pension fund asks for Chapter 11 trustee in Hostess case

A Hostess Brands union and a pension fund asked the judge overseeing the company's bankruptcy to appoint a Chapter 11 trustee to take control of the wind-down of the maker of Twinkies and Wonder Bread.

“A Chapter 11 trustee must be appointed to oversee the debtors' orderly liquidation and protect the best interest of creditors,” lawyers said in court papers filed Tuesday in U.S. Bankruptcy Court in White Plains, N.Y. The requesting parties are the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, and the $4.85 billion Bakery and Confectionery Union and Industry International Pension Fund, Kensington, Md.

Hostess won interim approval from a bankruptcy court judge to shut down and start selling its assets after last-minute mediation with the bakers' union failed to resolve a contract dispute, leaving more than 18,000 jobs at risk.

U.S. Bankruptcy Court Judge Robert Drain rejected a request by U.S. Trustee Tracy Hope Davis to convert the Hostess case to a Chapter 7 liquidation from Chapter 11, which would have handed control over the asset sales to a conservator. Conversion “would be a disaster,” Mr. Drain said.

Union lawyers said in court papers they support an “orderly” wind-down, but “object to that process being carried out by incumbent management” that earlier “brokered a failed reorganization,” that created the need for a trustee.

Tom Becker, a spokesman for Irving, Texas-based Hostess, declined to comment on the request for the appointment of a Chapter 11 trustee.

Hostess sought court protection in January, its second time in Chapter 11 bankruptcy protection, listing assets of $982 million and debt of $1.43 billion.