The final two auctions on the road to liquidation for Hostess Brands, headquartered in Irving, Texas, were to have been held today in New York under supervision of the Southern District Bankruptcy Court. However, there is to be only one, scheduled to begin at 10 a.m. Eastern time in a Manhattan courtroom. At least one qualified competing bid was submitted prior to the deadline for what Hostess CEO Greg Rayburn termed the “Northwest Group” of brands and assets of the bankrupt company. A spokesman, however, declined to name names Thursday evening prior to the March 15 scheduled auction.
The Stalking Horse Bidder, somewhat of a surprise when announced in late January, is United States Bakery, Inc., also known as Franz Bakery, a family-owned business in Portland, Ore. Their base bid of $28.85 million for bread brands including Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s also would gain them four bakeries, 14 depots and some equipment, according to court documents.
The second auction scheduled today, for the Drake’s brand of products, was canceled when no other offers were received, and the sale is expected to be confirmed for McKee Foods with an offer of $27.5 million.
McKee, who currently produces the Little Debbie brands and snack cakes and sweet treats sold at U.S. military installations around the world, will now add such names as Devil Dogs, Funny Bones, ad Yodels to its line-up of products.
The auctions, which had initially been expected to be “fast and furious” with competing bids hoped to raise the sales prices of assets for the now-defunct baking company, have been canceled, except for that scheduled for Beefsteak Bread. And in that case, it was less of an auction than a simple agreement to let a higher offer win the prize.
Flowers foods of Thomasville, Ga., submitted two separate stalking horse bids, one for a group of products including the iconic Wonder Bread, and a separate $30 million bid for the Beefsteak Brand. On auction day, Mexican giant Grupo Bimbo unveiled a competing bid of $31.9 million for Beefsteak, and Flowers walked away.
Those pending sales are now undergoing Department of Justice review, according to Hostess officials, who note that they are working closely with the parties to try to assure a smooth transition. There may, however, be some hurdles to jump for the buyers. At least two lawsuits may have to be settled or dismissed prior to certification of the sales, and a return to production of any former Hostess products.