Wonder Bread, Twinkies maker files for bankruptcy

September 23, 2004|Associated Press

KANSAS CITY, Mo. -- Interstate Bakeries Corp., the purveyor of lunch box staples Wonder Bread and Twinkies, filed for bankruptcy protection yesterday, felled by the combination of a more health conscious public and smothering operational costs.

The nation's largest wholesale baker, which had shown signs of financial weakness for months, filed for Chapter 11 reorganization and installed new management, saying it intended to survive. The company said it would continue operating its bakeries, outlet stores and distribution centers.

Tony Alvarez, the head of turnaround firm Alvarez & Marsal and the baker's new chief executive, said the company had no immediate plans to lay off additional personnel. But, he added, ''It's very rare in this country that anyone goes through Chapter 11 and is layoff-free."

For more than a year, Interstate Bakeries has struggled with declining sales of its bread and sweet goods products, a drop the firm and analysts blame on the popularity of high-protein, low-carb diets such as Atkins and South Beach.

The Kansas City company listed assets of $1.6 billion and liabilities of $1.3 billion in its court filings. In those filings, it said chairman and chief executive James Elsesser had resigned, effective yesterday. Joining Alvarez from his firm is John Suckow, who was named Interstate Bakeries' chief restructuring officer.

The company also said J.P. Morgan Chase & Co. had agreed to provide it with $200 million to pay employees, vendors and other expenses during the reorganization, provided officials got approval from a bankruptcy judge. A hearing was scheduled for today in US Bankruptcy Court in Kansas City.