Hostess Liquidation Needs Control by Trustee, U.S. Says

The U.S. trustee in the bankruptcy of Hostess Brands Inc. asked a judge to take control of the company’s liquidation away from the baker of Twinkies and Wonder bread.

U.S. Trustee Tracy Hope Davis today urged U.S. Bankruptcy Judge Robert D. Drain in White Plains, New York, to convert the case to a Chapter 7 from Chapter 11, based partly on the company’s intent to pay executive bonuses.

Hostess officials “have not demonstrated that the insider bonuses are permissible,” Davis wrote in a court filing.

The U.S trustee, part of the U.S. Justice Department, filed the objection before a bankruptcy court hearing today in White Plains. Hostess, based in Irving, Texas, said Nov. 16 it would shut down and fire more than 18,000 workers after a strike by its bakers’ union slowed production.

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

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