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DealBook: Hostess Brands Says It Will Liquidate

November 16, 2012 by Leave a Comment

10:33 a.m. | Updated While Twinkies have a reputation for an unlimited shelf life, the company that makes the junk food does not.

Hostess Brands, the bankrupt maker of cream-filled pastries like Twinkies and Ho Hos, said on Friday that it planned to wind down its operations. The decision comes a week after one of the company’s biggest unions went on strike to protest a labor contract.

Friday’s decision spells the end of Hostess, an 82-year-old company that has endured wars, countless diet fads and even an earlier Chapter 11 filing. But the liquidation may not mean the end of Twinkies, Ding Dongs and Wonder Bread. Such sweet treats could find new life under a different owner, once the company begins an auction of its brands and assets.

As the national appetite for the junk food waned, the baked-goods maker fell on hard times.

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In January, Hostess Brands filed again for Chapter 11, just three years after emerging from the previous restructuring. The company originally hoped to reorganize its finances, principally by cutting labor costs.

But those plans were stymied by the recent labor dispute. The work stoppage by the Bakery, Confectionery, Tobacco Workers and Grain Millers Union affected nearly two-thirds of Hostess’s factories across the country. The company first responded by closing three factories, then gave union members until 5 p.m. on Thursday to return to work.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Gregory F. Rayburn, Hostess’ chief executive, said in a statement.

Hostess’ advisers will soon begin to shut down the company’s 33 bakeries and 565 distribution centers. The vast majority of its 18,500 employees will be laid off, according to the company.

As part of the liquidation process, Hostess is also moving to sell off its iconic portfolio of treats. Such brands often find a second home after bankruptcy.

In 2009, Gordon Brothers Group and Hilco Consumer Capital other investors bought the assets of Polaroid, which pioneered instant photography. Last year, Polaroid struck a partnership with Lady Gaga, in an effort to revitalize the brand. Hilco also owns Linens ‘N Things, the home goods retailer that has been reinvented online.

Article source: http://dealbook.nytimes.com/2012/11/16/hostess-brands-says-it-will-liquidate/?partner=rss&emc=rss

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DealBook: A Bailout Like No Other

August 24, 2011 by Leave a Comment

So, I return from vacation to find that the restructuring of Greece continues to be very much a work in progress. Indeed, it now appears much more likely that Lehman Brothers will confirm a Chapter 11 plan before the European Union will work out its similar issues regarding Greece, Portugal, Ireland, Italy and Spain.

The latest problem comes from Finland’s misunderstanding of the nature of a bailout.

As readers no doubt recall, Greece ratcheted up it its projected deficit – almost doubling it, in fact – after the financial crisis. That quickly lead to Greece’s inability to refinance its debts at an affordable rate in the markets, and several rounds of bailout financing by the European Union and International Monetary Fund began. In exchange for such financing, Greece agreed to extremely painful austerity measures.

Each successive round of financing has become increasingly unpopular in the northern, “responsible” European Union jurisdictions like the Netherlands and, most important, Germany.

In Finland, the process was further complicated by a strong showing by the anti-euro True Finns party in recent elections. Thus, the Finnish government has every reason to “be tough” with Greece, and last week the Finns and the Greeks entered into a bilateral agreement whereby Greece would escrow collateral to protect the Finnish piece of the next bailout.

The problem, of course, is that the Finns are trying to make the bailout a low-risk proposition, and if Greece were a low-risk proposition it would not need a bailout in the first place.

And if Finland gets collateral, why not everyone else too? That, of course, is impossible and leaves Greece in a position where default becomes preferable, even desirable, since it at least leaves Greece in possession of its cash.

Essentially the Finns are a holdout creditor. In the corporate context you solve this problem by filing for bankruptcy and imposing majority rule. The European Union has no such ability to compel dissenting members, and thus we are no nearer a solution to Greece and its collateral effects than we were when this all began a few years ago.

Stephen J. Lubben is the Daniel J. Moore Professor of Law at Seton Hall Law School and an expert on bankruptcy.

Article source: http://feeds.nytimes.com/click.phdo?i=7dab01c2ca9580c4a941364289d69cfe

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Dodgers File for Bankruptcy

June 28, 2011 by Leave a Comment

Bankruptcy protection will shelter the team financially and allow it more time to reach a new media deal, according to a statement released by the Dodgers. The filing will give the team access to $150 million in financing that will prevent the disruption of the Dodgers’ day-to-day business, the statement said.

Frank McCourt, the team’s owner, blamed Selig for the decision to file for Chapter 11 protection.

“We brought the commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago, when his leadership team called us a ‘model franchise,’ ” McCourt said in the statement. “Yet he’s turned his back on the Dodgers, treated us differently and forced us to the point we find ourselves in today.”

Since McCourt took over ownership of the team in 2004, the Dodgers have racked up more than $400 million in debt, and the team has been at the center of a contentious divorce between McCourt and his wife, Jamie, who claims that half of the team belongs to her.

The 17-year television deal with Fox was to have been part of a divorce settlement between the two, but Selig canceled the deal after he said it would have only served to enrich Frank McCourt and would place the team’s future in doubt.

In April, Selig took control of the team and named a trustee, Tom Schieffer, to run it.

Court filings show that the Dodgers’ creditors include Manny Ramirez, who retired from baseball in April but is owed nearly $21 million, Andruw Jones, the outfielder who left the Dodgers for the Yankees earlier this year and is due $11 million, and pitcher Hiroki Kuroda, who is owed $4.5 million. The team also owes $153,000 to the broadcaster Vin Scully, who has been calling Dodgers games for 62 years.

The Dodgers are the only the most recent major-league team to face financial trouble. Last year, the Texas Rangers were sold in a bankruptcy auction to a group of buyers, including the Hall of Famer Nolan Ryan, that was favored by Selig. And the owners of the Mets are fighting a $1 billion lawsuit filed against them by the trustee for the victims of Bernard L. Madoff’s fraud.

In the statement, the Dodgers said the team’s operations would continue as usual: ticket prices will remain the same, the team will continue to sign and acquire players, and the salaries of Dodgers employees will continue to be paid.

Article source: http://feeds.nytimes.com/click.phdo?i=8ed617ff3818af4dca75f8ca39356a13

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Media Decoder: Hartenstein Takes Over at Tribune

May 7, 2011 by Leave a Comment

After a six-month process the Tribune Company has announced the appointment of a new president and chief executive.

On Friday, the struggling media company, home to some of the country’s biggest newspapers, announced that Eddy Hartenstein, the publisher and chief executive of The Los Angeles Times, had been appointed to the position. Mr. Hartenstein will continue to serve the Times as its chief executive and publisher and will be joined by Kathy Thomson, who was appointed to a new position of president and chief operating officer at the paper.

“The board feels strongly that it is in Tribune’s best interests to have one person providing strategic vision and day-to-day direction for the company and its employees as we prepare to emerge from the Chapter 11 process,” said Sam Zell, the chairman of the board for the Tribune Company in a statement provided by the company.

Mr. Hartenstein, the former head of the satellite television provider DirecTV, had been a member of the executive council that was created in October to oversee operations at the Tribune Company after Randy Michaels resigned as the company’s chief executive. The four-person council will be dissolved.

In an internal note to employees, Mr. Hartenstein said he looked forward to meeting the company’s employees in the coming months and “to communicating with you as frequently and as transparently as possible.”

The Tribune company filed for bankruptcy in December 2008, months after Mr. Zell purchased it for $8.2 billion. Mr. Michaels resignation came after a series of reports, including from The New York Times, revealed a hostile work environment under his leadership.

This post has been revised to reflect the following correction:

Correction: May 6, 2011

An earlier version of this post incorrectly attributed a quote from Sam Zell. It was from October, not today.

Article source: http://feeds.nytimes.com/click.phdo?i=a94615ff0625ec3b500eaef5c181c706

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