Illinois Chapter 11: Hostess given permission to wind down

Many in Illinois may already be aware that a U.S. Bankruptcy Court judge has given Hostess permission to wind down its business and begin selling the company's assets. However, the baker's union would like the court to appoint a Chapter 11 trustee to oversee the selling of the company's assets and the wind down process. The union, which has been on strike, does not trust Hostess management to properly conduct the liquidation.

The judge disagreed. According to a statement, he rejected a request to convert the company's Chapter 11 bankruptcy to a Chapter 7 because the delay it would cause in selling the company's assets would be disastrous. Regardless, the union hopes the judge will reconsider and appoint a Chapter 11 trustee at the next hearing.

The company sought permission to liquidate its assets after the judge made one last attempt to resolve the issues between the union and Hostess. The company stated that it was losing approximately $1 million a day since about one-third of its workers went on strike. Hostess hopes that it will be able to sell name brands such as Twinkie and Wonder Bread to buyers that would keep the brands alive.

There has been a lot of speculation as to how this Chapter 11 bankruptcy will end. When an Illinois company decides to file for Chapter 11 bankruptcy protection, the process of addressing the financial questions presented can be complex and time consuming. The company has to balance its needs with the requirements of the court. This is not always an easy process, and the assistance of an experienced legal professional is often required to work through any disagreements.

Source: Chicago Tribune, "Bakers' union seeks Chapter 11 trustee for Hostess liquidation," Nov. 27, 2012

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