Hostess Sales of Bread Brands Draw U.S. Objection

Hostess Brands Inc.’s planned sales of most of its bread business shouldn’t be approved as currently structured because the buyers would be improperly released from liabilities and obligations to comply with environmental laws, the U.S. said.

U.S. Attorney Preet Bharara in Manhattan objected March 1 to agreements reached last week with Flowers Foods Inc. (FLO), which is set to buy brands including Wonder for about $360 million, and Grupo Bimbo SAB (BIMBOA), which plans to buy the Beefsteaks brand for about $31.9 million.

“The proposed sale order, as currently drafted, would diminish or eliminate the government’s ability to enforce generally applicable police and regulatory statutes and regulations, and diminish or eliminate the buyer’s and debtor’s obligations to comply with environmental, health and safety laws,” Bharara said in the objection filed in U.S. Bankruptcy Court in Manhattan.

Hostess, founded in 1930, is liquidating after failing to reach an agreement with striking bakers on concessions to help the company emerge from its second bankruptcy.

Lance Ignon, a spokesman for Hostess, said he couldn’t immediately comment on the U.S. objection.

Previously known as Interstate Bakeries Corp., Hostess left an earlier bankruptcy in 2009 under the control of buyout firm Ripplewood Holdings LLC and lenders. The company, based in Irving, Texas, entered bankruptcy again in January 2012.

The case is In re Hostess Brands Inc., 12-bk-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains).

To contact the reporter on this story: Michael Bathon in Wilmington at mbathon@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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