Shareholders of Interstate Bakeries Corp., the largest U.S. wholesale baker, gained a voice in the company's bankruptcy proceedings as a Justice Department official named a five-member committee to represent equity holders.
U.S. Trustee Charles E. Rendlen named Atticus Capital LLC, Brandes Investment Partners, EagleRock Capital Management LLC, Fidelity Capital Management and QVT Financial LP to the shareholder panel, according to a Nov. 29 filing in U.S. Bankruptcy Court in Kansas City, Mo. The U.S. Securities and Exchange Commission supported the move, court papers said.
"This is a very promising development for shareholders, because now they are able to argue their case in court," said Duncan Yin, a distressed-debt analyst at CRT Capital Group LLC who rates Interstate shares "buy." A bankruptcy that doesn't wipe out shareholders' interest is "extremely rare," he said.
Interstate, maker of Hostess Twinkies, Wonder bread and Drake's cakes, listed $1.63 billion of assets and $1.32 billion of debts in its Sept. 22 bankruptcy filing, showing that as much as $310 million of value might be left for shareholders after creditors are paid.
Shares of Interstate, which has operations in Salt Lake City and Ogden, rose 3 cents Wednesday to $5.85 in over-the-counter trading. Following the bankruptcy filing the company's stock was delisted from the New York Stock Exchange, where it had dropped to a 52-week low of $2.05 the day of the filing from $14.50 on Jan. 2.
The Kansas City-based company, with 53 bakeries and 32,000 workers, filed for bankruptcy reorganization to confront changing diet trends, rising fuel costs and mounting pension liabilities. Interstate had a $26 million loss on $3.47 billion in net sales for the year ended May 29, according to court papers.
"We look forward to working with the equity committee as we sort through the various issues that confront the company," Tony Alvarez, Interstate's chief executive officer, said through spokeswoman Sandra Sternberg.
The Los Angeles-based investment bank Houlihan, Lokey, Howard & Zukin is advising the equity committee, which is represented by law firm Sonnenschein, Nath & Rosenthal, according to court papers.
The U.S. Trustee's office is an arm of the Justice Department that oversees bankruptcy cases to prevent abuses and helps creditors and other stakeholders receive fair treatment.
Rendlen, through a spokeswoman, declined immediate comment.