Interstate Bakeries Corporation (IBC) filed a reorganization plan that was short on relevant specifics and glosses over the company's inability to come to terms with the Teamsters union late yesterday.
"It's interesting that after the Teamsters teamed up with Yucaipa and Bimbo, Interstate finally - after having three years to come up with its own plan - filed a plan to emerge from bankruptcy," said Richard Volpe, Director of the Teamsters Bakery Conference. "A key component of IBC's exit financing requires a deal with the Teamsters. Regrettably, IBC management never got serious in its negotiations with the Teamsters. After months of negotiating in good faith, we gave management a drop-dead date to reach agreement and that date passed last week."
"We have little confidence that current IBC management could come up with a successful plan to emerge from bankruptcy after three years in bankruptcy, previous rounds of negotiating concessions, excluding qualified investors, and wrong-headed business decisions like closing Southern California," Volpe said. "So we sought out other alternatives and came to the conclusion that a partnership with a qualified investment company, Yucaipa, and an equally talented pool of management at Bimbo Bakeries USA would be in our best interest."
For months, IBC refused to allow access to its books to any investor, including Yucaipa, that wouldn't sign an agreement preventing them from talking to the unions.
"That was a slap in our face," Volpe said. "They approached our negotiations the same way - refusing to honor and respect the sacrifices that are being asked of us. It wasn't until Interstate was pushed that they responded with a plan of their own. Well, they are three years too late. We have no confidence in their CEO, Craig Jung, and no confidence in their plan. IBC recently suggested in its bankruptcy court filings that they'll now allow investors to talk with the unions. Let's see if that's the position they take in court on the 7th."
"We believe a Bimbo Bakeries/Yucaipa plan is the best one for reorganizing and reinvigorating Interstate Bakeries," said Jim Hoffa, Teamsters General President. "Our goal was to find a financing and management team that would enable the most stable long-term health of Interstate. We have every confidence that, with the strategic and operating expertise of both Yucaipa and Bimbo Bakeries, Interstate can position itself to be the major player in the baked goods market that it once was."
More than 9,500 IBC employees are represented by the Teamsters Union. Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico.