Interstate Bakeries Corp. (IBC), the nation's largest wholesaler baker whose products include Twinkies (search) and Wonder Bread (search), filed for Chapter 11 bankruptcy protection early Wednesday. The company also named a new chief executive.
The electronic filing, made shortly after midnight with the U.S. Bankruptcy Court for the Western District of Missouri in Kansas City, listed assets of $1.626 billion and liabilities of $1.321 billion.
The company said it had a commitment, subject to bankruptcy court approval, from JP Morgan Chase Bank to provide $200 million to pay suppliers, employees and other operating costs during the reorganization. It said it would continue operating its bakeries, outlet stores and distribution centers.
James R. Elsesser, who had been chairman and chief executive officer, resigned both positions effective Wednesday, and the board named Tony Alvarez (search) as CEO, with John Suckow to be chief restructuring officer. Both are with Alvarez & Marsal, a turnaround management firm founded and headed by Alvarez.
Leo Benatar, a member of the board, was elected to be the non-executive chairman.
"IBC has some of the most recognizable and popular baked breads and sweet goods brands in the nation," Alvarez said in a statement. "By filing for protection under Chapter 11 and obtaining...financing, the company should have the liquidity, time and resources necessary to thoroughly identify, assess and address the issues that will enable this company to be successful in the future."
Last month the company missed a second deadline for filing its annual report, after request an extension in May because of a series of investigations into its reserve fund for workers' compensation claims.
The report was due Aug. 27, but the company said it was still not finished because of problems with a financial system it started using in June, uncertainty over results for the current quarter, and questions about its ability to pay its loans this year.
It also said there was a possibility that auditors would include a paragraph in the report saying "there may be substantial doubt about the company's ability to continue as a going concern."
"The company has a very high cost structure burdened by some unfavorable union contracts and ultimately this company has to get their costs in order to survive, and we just don't know if they can do that," said Janney Montgomery Scott analyst Mitchell Pinheiro, who has a "hold" rating on the shares.
Interstate, with annual sales of $3.5 billion, operates more than 50 bakeries and employs about 34,000, including 600 of them in the Kansas City area.
Shares of Interstate plunged 62 percent in early morning trading on the Inet electronic brokerage network. The stock, which traded as high as $16.24 six months ago, fell to $1.25, down $2.02 from its close at $3.27 on Tuesday on the New York Stock Exchange (search). The shares were halted for pending news by the NYSE on Wednesday.
"This is a business that has been in steady decline for the last eight years and they sometimes blame Atkins or blame other consumer trends," said Pinheiro. "But the bottom line is that this company hasn't innovated ... and when they have innovated they've generally been one step late."
Reuters and the Associated Press contributed to this report.