Dear Local 655 Members,
We have been advised by our attorney that the September 18, 2013, IBC Bankruptcy Status Report indicates that there will be NO payment of administrative claims which includes all claims for vacation pay for UFCW members.
The Hostess Debtors’ latest status report is available here if you would like to read it. The report confirms that there will be NO funds available for payment of administrative claims, which would include vacation and severance claims.
Approximately $222.6 million in outstanding principal amount of fourth lien secured notes remains unpaid. As of September 13, 2013, the Debtors have $90.5 million in cash in their accounts, of which $18.3 million is segregated within the Debtors’ accounts for specific purposes (such as for property tax payments) pursuant to orders of the Court or otherwise. As noted by the Debtors at the June 25, 2013, hearing before the Court, the Debtors believe that it is unlikely that they will ultimately be able to pay their fourth lien secured notes in full and, thus, the Debtors anticipate that they will not have funds available for distribution to administrative creditors whose claims are not included in the Liquidation Budget pursuant to the Winddown Order.
At the hearing last year regarding the Winddown Plan, the Unions objected on the basis that the estate would likely be “administratively insolvent” (i.e., funds would not be available to pay administrative claims) if the Debtor retained control of the Winddown, rather than an independent trustee. The Debtors’ “experts” claimed otherwise. Unfortunately, Judge Drain sided with the Debtors.
As a note, last week’s AFL-CIO Convention added bankruptcy law reform to its “to-do list” for the labor movement. It’s not something union members or leaders think about very often, but it’s past time for it.
We wish the outcome would have been better for our members. If we can be of service in the future, please do not hesitate to contact us.
Sincerely,
Dave Politte, Secretary-Treasurer
Click here to read Hostess Debtors’ latest status report…
