In Re Hostess Brands

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x : In re : : Hostess Brands, Inc., et al.,1 : : Debtors. : : ---------------------------------------------------------------x
Chapter 11 Case No. 12-_____ (___) (Jointly Administered)
MOTION OF THE DEBTORS PURSUANT TO 11 U.S.C. 105(A) AND 363(B) TO EMPLOY AND RETAIN FTI CONSULTING, INC. TO PROVIDE THE DEBTORS AN INTERIM TREASURER AND ADDITIONAL PERSONNEL NUNC PRO TUNC TO THE PETITION DATE TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE: Hostess Brands, Inc. and its five domestic direct and indirect subsidiaries, as debtors and debtors in possession (collectively, "Hostess" or the "Debtors"), hereby move the Court for the entry of an order pursuant to sections 105(a) and 363(b) of title 11 of the United States Code (the "Bankruptcy Code") (i) authorizing the Debtors, pursuant to the terms and conditions of that certain agreement between FTI Consulting, Inc. and the Debtors dated January 4, 2012 (as amended, the "Engagement Letter"),2 to retain FTI Consulting, Inc. ("FTI") to provide an Interim Treasurer and Additional Personnel (as described below) for the Debtors nunc pro tunc to the date hereof (the "Petition Date");3 and (ii) granting certain related relief. In
1
The Debtors are the following six entities (the last four digits of their respective taxpayer identification numbers follow in parentheses): Hostess Brands, Inc. (0322), IBC Sales Corporation (3634), IBC Services, LLC (3639), IBC Trucking, LLC (8328), Interstate Brands Corporation (6705) and MCF Legacy, Inc. (0599).
2 3
A copy of the Engagement Letter is attached hereto as Exhibit A. Nunc pro tunc retention is appropriate because this Motion was filed on the Petition Date, FTI will continue to provide services to the Debtors from and after the Petition Date and a hearing on this Motion will not be conducted, and an order will not be entered, until after the Petition Date.
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support of this Motion, the Debtors rely upon the declaration of J. Robert Medlin (the "Medlin Declaration") attached hereto as Exhibit C and incorporated herein by reference, and in further support thereof, the Debtors respectfully represent as follows; Background 1. On the Petition Date, the Debtors commenced their reorganization cases
by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code. By a motion filed on the Petition Date, the Debtors have requested that their chapter 11 cases be consolidated for procedural purposes only and administered jointly. 2. The Debtors are authorized to continue to operate their business and
manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 3. Hostess Brands, Inc. is a Delaware corporation. Hostess Brands, Inc. is
the direct or indirect parent of the other Debtors, each of which is wholly-owned by Hostess Brands, Inc. or one of its Debtor subsidiaries. The Debtors maintain their corporate headquarters in Irving, Texas. Debtor IBC Sales Corporation owns principal real property assets in Elmsford, New York. 4. Founded in 1930, Hostess is one of the largest wholesale bakers and
distributors of bread and snack cakes in the United States. Today, Hostess sells an array of popular products under new and iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. The Debtors operate 36 bakeries, 565 distribution centers,
approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States. 5. The Debtors operate in a mature industry with high levels of competition
and related pricing pressures, thin operating margins and competitors with more sophisticated
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technology and significant cost advantages. Over the past several decades and continuing to the present, the industry has experienced significant consolidation. As a result of this consolidation, the Debtors' primary national and large regional competitors are, at once, expanding their market reach and consolidating operations through acquisitions and other means, thus widening their cost advantages. Importantly, the Debtors' competitors employ work forces that are not
unionized or only partially unionized, which allow them to operate with significantly less burdensome operating restrictions and overall cost structures. As a direct result of their
significant and long-standing unionized workforce, the Debtors have significant legacy costs, primarily in the form of pension and medical benefits obligations, that their competitors do not share. Whether the Debtors can achieve long-term viability depends directly and substantially on the Debtors' ability to achieve dramatic change to their labor agreements, with a corresponding material reduction in their cost structure and legacy pension and medical obligations, and a restructuring of their capital structure. That is the purpose and the focus of these chapter 11 cases. 6. The Debtors' production and distribution systems are heavily dependent on
labor-intensive processes involving, among other things, complicated and extensive local route delivery systems that service nearly all of the continental United States and a national footprint of 36 bakeries. To staff this labor-intensive network, the Debtors employ approximately 19,000 people, of which 83% are members of unions who are subject to 372 collective bargaining agreements. The Debtors' unionized employees belong to 12 separate unions, but the
overwhelming majority of the Debtors' unionized workforce are members of either the International Brotherhood of Teamsters (the "IBT") or the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union (the "BCT").
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7.
Because their workforce is heavily unionized, the Debtors also participate
in 40 multiemployer pension plans, which, by law, exist only where one or more employers each contribute to a pension plan pursuant to one or more collectively-bargained agreements. The Debtors' cash contribution obligations to these plans go beyond amounts attributable to the retirement benefits for the Debtors' own workforce; they also encompass the contributions attributable to the retirement benefits of the workforces of other employers who have ceased to exist or have otherwise withdrawn from the plans. By statute, the plans are structured to place the financial burdens of all of a plan's retirees upon those remaining companies that have active union employees. Over the last several decades, the number of companies and the active employee base supporting these pension plans have shrunk significantly, thus increasing the burden on the companies, such as Hostess, that remain. 8. The Debtors' management team, which as currently comprised has only
been in place for slightly more than a year, has taken a fresh look at, and has spent considerable time and energy analyzing, the Debtors' operations and cost structure. As a result of that review, management has developed a business plan that it believes will allow the Debtors to regain longterm viability. The business plan is premised upon achieving a competitive cost structure, including relief from uncompetitive pension and medical benefit legacy costs, re-emphasizing and funding the marketing of the Debtors' brands, streamlining and modernizing the distribution of product and obtaining relief from other restrictive work rules that limit the Debtors' flexibility and competitiveness. 9. In particular, the Debtors believe that their successful reorganization must
encompass systemic, dramatic change, including: a. withdrawing completely from multiemployer pension plans to achieve relief from the crippling costs of these plans that are, in large part, a result 4
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of the required funding of retirees whose former employers no longer contribute to the plans; b. addressing the Debtors' legacy health and welfare costs to achieve a substantial reduction in the cost of providing benefits to bring such costs in line with current competitive market costs; modifying the Debtors' existing collective bargaining agreements to relax work rules and obtain other relief necessary to both bring the Debtors' labor costs in line with that of their competitors and provide the operating flexibility necessary to respond to changing customer requirements for delivery and service; securing new capital investment to modernize and automate the Debtors' production and distribution operations; and restructuring the Debtors' capital structure to significantly reduce debt and related expense. This company has been down this road before. Hostess (then known as
c.
d. e. 10.
Interstate Bakeries Corporation ("IBC")) sought bankruptcy relief in 2004 (the "IBC Bankruptcy"). The complex and sometimes highly contentious IBC Bankruptcy lasted more than four and a half years and achieved only limited, incremental change to the company's cost structure leaving the multiemployer pension benefits and costs untouched, while allowing the company to emerge as a highly levered entity. As a result, the Debtors currently have four separate tranches of long-term secured debt, under which they have aggregate outstanding liabilities of approximately $860 million. The Debtors exited from the IBC Bankruptcy on February 3, 2009 as a privately-held company, whose largest equityholders are IBC Investors I, LLC, IBC Investors II, LLC and IBC Investors III, LLC (collectively, the "Sponsor Funds") and a subset of their then existing lenders.4
The current stockholders of Hostess include, in addition to the Sponsor Funds: Craig D. Jung, SPCP Group, LLC, Monarch Debt Recovery Master Fund Ltd, Monarch Opportunities Master Fund Ltd, Monarch Income Master Fund Ltd, McDonnell Loan Opportunity Ltd., Arrow Distressed Securities Fund, Schultze Apex Master Fund, Ltd., Schultze Master Fund, Ltd., Gephardt Group Labor Advisory Services, Mars & Co. Consulting, LLC and Brian Driscoll.
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11.
Adjusting for one-off receipts, such as tax refunds and the proceeds from
asset sales, the Debtors have consumed approaching $250 million in cash since exiting the IBC Bankruptcy in 2009. 12. Accordingly, after developing their business plan, the Debtors initiated
negotiations with their lenders and unions to effect the transformational changes required for their business. At the same time, the Debtors required additional liquidity to allow these
discussions and negotiations to occur. Accordingly, the Debtors began active discussions with their lenders regarding additional financing. As a result of those discussions, in March 2011, Hostess issued $30 million of 10% Secured Convertible PIK-Election Series C Notes, due 2019 which were purchased by two of the Sponsor Funds. Additionally, in June 2011, two of the Sponsor Funds invested an additional $10 million in the form of equity. Finally, in late August, the Debtors were able to obtain an additional $20 million of financing from certain of their first lien term lenders. The purpose of these additional financings was to permit the Debtors time to negotiate with the unions outside of a chapter 11 filing. 13. After allowing the IBT and BCT to commence extensive due diligence in
July and August of 2011 (which diligence continued thereafter), the Debtors initiated discussions with the IBT and the BCT in September and provided both unions with proposals for modification of their respective collective bargaining agreements. The Debtors provided the IBT and the BCT with access to a data room containing over 625 documents to enable them to evaluate the proposals. Additionally, the Debtors responded to over 160 diligence requests from the professionals representing the IBT and the BCT.
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14.
After months of bargaining, the Debtors were unable to reach agreement
with their unions regarding pensions, health and welfare benefits and work rule changes before insufficient liquidity necessitated this filing. 15. Accordingly, the Debtors have filed these chapter 11 cases to conserve
their remaining cash and access the additional debtor-in-possession funding required to continue to operate while seeking to finalize negotiations regarding the terms of their labor agreements and capital structure. 16. Additional information regarding the background of the Debtors, the need
for the filing of these cases and the goals for the Debtors within chapter 11 are set forth in the Affidavit of Brian J. Driscoll, which is filed contemporaneously herewith. Jurisdiction 17. This Court has subject matter jurisdiction to consider this matter pursuant
to 28 U.S.C. 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. The FTI Consulting Engagement 18. On or about June 10, 2011, the Debtors appointed Mr. David Rush
Interim Treasurer, as set forth in the Engagement Letter. The Engagement Letter further states that FTI will provide FTI employees to serve as temporary employees of the Debtors necessary to support the treasury activities ("Additional Treasury Personnel") and other business ("Additional Financial Personnel") of the Debtors (collectively, "Additional Personnel," and together with the Interim Treasurer, the "Retention Personnel") as set forth more fully herein and in the Engagement Letter. 19. The Debtors are familiar with the professional standing and reputation of
FTI and Mr. Rush, as well as the other Additional Personnel, who the Debtors understand and
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recognize have a wealth of experience in providing consulting services in restructurings and reorganizations and enjoy an excellent national reputation for turnaround services they have rendered in bankruptcy cases on behalf of debtors and creditors throughout the United States. The Debtors have been advised by FTI that it will endeavor to coordinate with the other professionals retained in these bankruptcy cases to eliminate unnecessary duplication or overlap of work. Terms of Engagement 20. Pursuant to the terms of the Engagement Letter,5 the Retention
Personnel's activities would include, but not be limited to: Interim Treasury Management Function a. Provide comprehensive treasury services and coordinate and direct Company employees as necessary. David Rush, Senior Managing Director, will serve in the capacity of Interim Treasurer for a fixed monthly fee as described below; Work with management and employees to refine the Company's existing cash flow forecasts, related analyses and reporting. Provide any recommendations to existing practices and methodologies; and Provide additional FTI professionals to serve as Additional Treasury Personnel of the Company and provide support as required.
b.
c.
Provide FTI professionals to serve as Additional Financial Personnel of the Company to provide services as follows and as may be requested by the Company from time to time: d. Assist with the Company's execution of planned liquidity enhancement initiatives, including working capital management and cost savings programs; Develop the Company's integrated multi-year financial projection model by brand, business unit and region through coordination and discussion with management and Company employees;
e.
Capitalized terms used but not defined herein are ascribed the meanings given such terms in the Engagement Letter.
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f.
Perform a detailed assessment of the Company's operations, identify performance improvement opportunities and assist management and Company employees in implementing and executing the identified initiatives; Prepare other financial analysis and reporting as needed to assist management in negotiations and discussions with the Company's stakeholders; Participate in meetings and negotiations/interface with stakeholders and/or their advisors as necessary. Prepare a comprehensive winddown plan and related liquidation analysis with supporting schedules, and assist the Company in implementation of such plan, as necessary; Develop with management detailed contingency planning related to potential liquidity shortfalls or planned restructuring programs; Prepare Schedules of Assets & Liabilities and Statements of Financial Affairs, claims reconciliations and settlements, appropriate financial and operational cut-off periods, development of a creditor matrix, and first day motions support; Provide testimony as required; and Perform any other interim management services as mutually agreed upon. Fees and Expenses
g.
h. i.
j. k.
l. m.
21. Fees in connection with this Engagement (other than the treasury advisory function described below) will be based upon time incurred by the Additional Financial Personnel providing the Services, multiplied by our standard hourly rates, illustrated below: Senior Managing Directors Directors / Managing Directors Consultants / Senior Consultants Administrative / Paraprofessionals $780-895 $560-745 $280-530 $115-230
The Debtors understand that FTI revises its rates for services periodically, and the Debtors will pay such rates as reasonably adjusted without altering or limiting the Debtors' obligation to compensate FTI in accordance with the Engagement Letter. The Debtors further understand that
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FTI does not provide any assurance regarding the outcome of its work and that its fees will not be contingent on the results of such work. 22. Prior to any increases in rates as set forth in paragraph 21 of the Motion,
FTI shall file a supplemental affidavit with the Court and give ten business days' notice to the Debtors, the Office of the United States Trustee for the Southern District of New York (the "U.S. Trustee") and any official committee, which supplemental affidavit shall explain the basis for the requested rate increases in accordance with section 330(a)(3)(F) of the Bankruptcy Code and indicate whether the Debtors have received notice of and approved the proposed rate increase. Treasury Advisory Function Fixed Monthly Rate 23. For services rendered in connection with the treasury advisory function of
the scope of services, the Debtors agree to pay FTI a monthly, non-refundable advisory fee of $65,000 for an Interim Treasurer (David Rush) and $55,000 per month each for two additional temporary employees serving as Additional Treasury Personnel (Larry Manning and Robert Molina). Payment of such fees is due and payable on the first business day of each month. 24. In addition to the fees outlined above, FTI will bill reasonable direct
expenses which are likely to be incurred on the Debtors' behalf during this Engagement. Direct expenses include reasonable and customary out-of-pocket expenses which are billed directly to the engagement such as certain telephone, overnight mail, messenger, travel, meals, accommodations and other expenses specifically related to the engagement. Further, if FTI and/or any of its employees are required to testify or provide evidence at or in connection with any judicial or administrative proceeding relating to this matter, FTI will be compensated by the Debtors at its regular hourly rates and reimbursed for reasonable direct expenses with respect thereto.
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Completion Fee 25. In addition to the fixed monthly rate and hourly fees and expenses, and as
more fully described in the Engagement Letter, subject to this Court's approval the Debtors have agreed to pay FTI a completion fee of $1,250,000 (the "Completion Fee"), upon the earliest occurrence of the following: a. b. 26. Confirmation of a Chapter 11 plan of reorganization or liquidation; or The sale of substantially all of the Debtors' assets.
For the avoidance of any doubt, FTI acknowledges that the Completion
Fee is subject to this Court's approval based on a reasonableness standard as provided in the Jay Alix Protocol. Retainer Cash on Account 27. Prior to the Petition Date, the Debtors provided FTI with a retainer of
$350,000 (the "Retainer"). The Retainer shall be credited against any amounts due at the termination of the Engagement Letter and returned to the Debtors upon the satisfaction of all obligations owed to thereunder. Indemnification Provisions 28. The Engagement Letter contains standard indemnification language with
respect to FTI's services. Notwithstanding such language, the Debtors and FTI have agreed that the Debtors shall only indemnify those FTI employees serving as executive officers of the Debtors on the same terms as provided to the Debtors' other officers and directors under the Debtors' by-laws and applicable state law, along with insurance coverage under the Debtors' directors' and officers' insurance policies, and the indemnification provisions of the Engagement Letter shall not apply to FTI.
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Reporting Requirements 29. To maintain transparency, FTI would file with the Court and serve on the
Debtors, the U.S. Trustee, and any statutory committee(s) appointed in these cases (collectively, the "Committees," and together with the Debtors and the U.S. Trustee, the "Notice Parties") a report on staffing (the "Staffing Report") by the 20th of each month for the previous month, which report would include the names and tasks filled by all FTI personnel involved in this engagement. The Staffing Report (and FTI's staffing for this matter) would be subject to review by the Court in the event so requested by any of the Notice Parties. 30. Moreover, FTI would file with this Court, and serve upon the Notice
Parties, reports of compensation earned and expenses (the "Compensation Reports") incurred on at least a quarterly basis. The Compensation Reports would summarize the service provided, identify the compensation earned, itemize expenses incurred and provide for an objection period. All such compensation would be subject to review by this Court if an objection is filed. Dispute Resolution Provisions 31. The Debtors and FTI have agreed, subject to the Court's approval of this
Motion, that: (a) any controversy or claim with respect to, in connection with, arising out of, or in any way related to this Motion or the services provided by FTI to the Debtors as outlined in this Motion, including any matter involving a successor in interest or agent of any of the Debtors or of FTI, shall be brought in the Bankruptcy Court or the District Court for the Southern District of New York (if the reference is withdrawn); (b) FTI and the Debtors and any and all successors and assigns thereof, consent to the jurisdiction and venue of such court as the sole and exclusive forum (unless such court does not have or retain jurisdiction over such claims or controversies) for the resolution of such claims, causes of actions or lawsuits; (c) FTI and the Debtors, and any
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and all successors and assigns thereof, waive trial by jury, such waiver being informed and freely made; (d) if the Bankruptcy Court, or the District Court (if the reference is withdrawn), does not have or retain jurisdiction over the foregoing claims and controversies, FTI and the Debtors, and any and all successors and assigns thereof, will submit first to non-binding mediation; and, if mediation is not successful, then to binding arbitration, in accordance with the dispute resolution procedures set forth in Exhibit B to this Motion; and (e) judgment on any arbitration award may be entered in any court having proper jurisdiction. By this Motion, the Debtors seek approval of this agreement by the Court. Further, FTI has agreed not to raise or assert any defense based upon jurisdiction, venue, abstention or otherwise to the jurisdiction and venue of the Bankruptcy Court or the District Court for the Southern District of New York (if the reference is withdrawn) to hear or determine any controversy or claims with respect to, in connection with, arising out of, or in any way related to this Motion or the services provided hereunder. Legal Basis for Relief Requested The Debtors Have Exercised Their Sound and Prudent Business Judgment 32. Section 363 of the Bankruptcy Code provides that, after notice and a
hearing, a Debtor may use property of the estate other than in the ordinary course of business. A Debtor's decision to use, sell or lease assets outside the ordinary course of business must be based upon the sound business judgment of the debtor. See In re Chateaugay Corp., 973 F.2d 141, 143 (2d Cir. 1992) (holding that a judge determining a section 363(b) application must find from the evidence presented before him a good business reason to grant such application); see also In re Ionosphere Clubs, Inc., 100 B.R. 670, 674 (Bankr. S.D.N.Y. 1989) (noting that the standard for determining a section 363(b) motion is a "good business reason"); Committee of Asbestos-Related Litigants v. Johns-Manville Corp. (In re Johns Manville Corp.), 60 B.R. 612,
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616 (Bankr. S.D.N.Y. 1986) ("Where the debtor articulates a reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts will generally not entertain objections to debtor's conduct"). 33. The retention of corporate officers is proper under section 363 of the
Bankruptcy Code, and courts in this district and elsewhere have determined that such retention is an appropriate exercise of a debtor's business judgment. See, e.g., In re Archbrook Laguna Holdings LLC, No. 11-13292 (SCC) (Bankr. S.D.N.Y. Aug. 3, 2011) (order authorizing retention of chief restructuring officer pursuant to sections 363(b) and 105(a) of the Bankruptcy Code); In re Calpine Corp., No.05-60200 (BRL) (Bankr. S.D.N.Y. Jan. 17, 2007) (order authorizing employment of interim chief financial officer pursuant to section 363 of the Bankruptcy Code); In re Dana Corp., Case No. 06-10354 (BRL) (Bankr. S.D.N.Y. Mar. 29, 2006) (order designating chief restructuring officer and chief financial officer pursuant to section 363 of the Bankruptcy Code); In re Worldcom, et al., Case No. 02-13533 (AJG) (Bankr. S.D.N.Y., Sept. 17, 2002) (order approving retention of crisis managers to provide chief financial officer, chief restructuring officer and additional temporary staff as needed pursuant to section 363 of the Bankruptcy Code); see also In re Harry & David Holdings, Inc., Case No. 11-10884 (MFW) (Bankr. D. Del. Apr. 27, 2011) (order authorizing retention of Alvarez & Marsal to provide an interim chief executive officer and chief restructuring officer and certain additional officers and personnel). 34. Entry into the Engagement Letter and retaining the Interim Treasurer and
Additional Personnel upon the terms set forth in the Engagement Letter, this Motion, and any order approving this Motion would enable the Debtors most efficiently to maximize value for their estates. Thus, the Debtors believe that it would be in their best interests and in the best
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interests of their respective estates, their creditors, and other parties-in-interest for the Court to approve the Engagement Letter and the retention of Mr. Rush as Interim Treasurer and the Additional Personnel in accordance with the Engagement Letter, with such retention being deemed effective as of the Petition Date. 35. The Debtors believe that FTI's fee structure is fair and reasonable in light
of the type of services being provided and is comparable to those generally charged by firms of similar stature to FTI for comparable engagements. In addition, given the numerous issues FTI may be required to address in these cases, FTI's commitment to the variable level of time and effort necessary to address all such related issues as they arise, and the market prices for FTI's services for engagements of this nature in an out-of-court context, the Debtors believe that the FTI fee arrangement is fair and reasonable. The Proposed Retention Comports with the Bankruptcy Code 36. FTI will provide the Notice Parties with the Staffing Reports and the Because the Debtors are seeking to retain FTI and the Retention
Compensation Reports.
Personnel pursuant to section 363 of the Bankruptcy Code and not under section 327 of the Bankruptcy Code, FTI is not subject to the compensation requirements of sections 328, 330, and 331 of the Bankruptcy Code, and therefore, the Debtors request that fees and expenses of FTI incurred in the performance of the above-described services be treated as an administrative expense of the Debtors' chapter 11 estates and be paid by the Debtors in the ordinary course of business, without the need for FTI to file fee applications or otherwise seek Court approval for the compensation of its services and reimbursement of its expenses, other than those described above.
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37.
In addition, the Debtors are not seeking to retain FTI as a professional
under section 327 of the Bankruptcy Code. Accordingly, there is no requirement that FTI or any of the Retention Personnel be disinterested. However, to the best of the Debtors' knowledge, information, and belief, FTI does not have any interest materially adverse to the Debtors' estates or any class of creditor or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the Debtors, or for any other reason. With that said, FTI believes it is disinterested because, to the best of FTI's knowledge, information, and belief, FTI has no connection with the Debtors, their creditors, or any other party-in-interest, except as disclosed in the Medlin Declaration. 38. Additionally, the Court's general equitable powers codified in section
105(a) of the Bankruptcy Code provide ample authority for the relief requested herein. Section 105(a) of the Bankruptcy Code empowers the Court to "issue any order, process, or judgment that is necessary to carry out the provisions of this title." See 11 U.S.C. 105(a); see also United States v. Energy Resources Co., 495 U.S. 545, 549 (1990); Adelphia Communications Corp. v. The American Channel (In re Adelphia Communications Corp.), 345 B.R. 69, 85 (Bankr. S.D.N.Y. 2006) ("Section 105(a) provides broad equitable power for a Bankruptcy Court to maintain its own jurisdiction and to facilitate the reorganization process."); In re Continental Airlines, 203 F.3d 203, 211 (3d Cir. 2000) ("Section 105(a) of the Bankruptcy Code supplements courts' specifically enumerated bankruptcy powers by authorizing orders necessary or appropriate to carry out provisions of the Bankruptcy Code.") Notice 39. No trustee or examiner has been appointed in these chapter 11 cases.
Notice of this Motion has been provided to: (a) the U.S. Trustee; (b) counsel to the Debtors' postpetition lenders; (c) counsel to General Electric Capital Corporation, as agent under the
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Debtors' first lien asset-backed revolving credit facility; (d) counsel to Silver Point Finance, LLC, as agent under the Debtors' first lien term loan facility and third lien credit facility; (e) counsel to The Bank of New York Mellon Trust Company, as indenture trustee for the Debtors' fourth lien 5% secured convertible notes; (f) counsel to the Sponsor Funds; (g) counsel to the IBT; (h) counsel to the BCT; and (i) those creditors holding the 40 largest unsecured claims against the Debtors' estates. The Debtors submit that no other or further notice need be provided. No Prior Request 40. No prior request for the relief sought in this Motion has been made to this
or any other Court in connection with these chapter 11 cases. WHEREFORE, for the reasons set forth herein, the Debtors respectfully request that the Court enter an order, substantially in the form attached hereto as Exhibit D, granting the relief requested herein and such other and further relief as may be just and proper under the circumstances.
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Dated: January 11, 2012 New York, New York
Respectfully submitted,
Hostess Brands, Inc., et al. Debtors and Debtors in Possession /s/ John Stewart John Stewart Chief Financial Officer of Hostess Brands, Inc.
Filed by: /s/ Corinne Ball Corinne Ball Heather Lennox Lisa Laukitis Veerle Roovers JONES DAY 222 East 41st Street New York, New York 10017 Telephone: (212) 326-3939 Facsimile: (212) 755-7306 - and Ryan T. Routh JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Telephone: (216) 586-3939 Facsimile: (216) 579-0212 PROPOSED ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION
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EXHIBIT A [Engagement Letter]
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EXHIBIT B [Dispute Resolution Procedures]
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DISPUTE RESOLUTION PROCEDURES The following procedures shall be used to resolve any controversy or claim ("dispute") as provided in this Agreement. If any of these provisions are determined to be invalid or unenforceable, the remaining provisions shall remain in effect and binding on the parties to the fullest extent permitted by law. Mediation A dispute shall be submitted to mediation by written notice to the other party or parties. In the mediation process, the parties will try to resolve their differences voluntarily with the aid of an impartial mediator, who will attempt to facilitate negotiations. The mediator will be selected by agreement of the parties. If the parties cannot agree on a mediator, a mediator will be designated by the American Arbitration Association ("AAA") or JAMS/Endispute at the request of a party. Any mediator so designated must be acceptable to all parties. The mediation will be conducted as specified by the mediator and agreed upon by the parties. The parties agree to discuss their differences in good faith and to attempt, with the assistance of the mediator, to reach an amicable resolution of the dispute. The mediation will be treated as a settlement discussion and therefore will be confidential. The mediator may not testify for either party in any later proceeding relating to the dispute. No recording or transcript shall be made of the mediation proceedings. Each party will bear its own costs in the mediation. The fees and expenses of the mediator will be shared equally by the parties. Arbitration If a dispute has not been resolved within 90 days after the written notice beginning the mediation process (or a longer period, if the parties agree to extend the mediation), the mediation shall terminate and the dispute will be settled by arbitration and judgment on the award rendered
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by the arbitration may be entered in any Court having jurisdiction thereof. The arbitration will be conducted in accordance with the procedures in this document and the Arbitration Rules for Professional Accounting and Related Services Disputes of the AAA ("AAA Rules").
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EXHIBIT C [Declaration of J. Robert Medlin]
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DECLARATION OF J. ROBERT MEDLIN IN SUPPORT OF THE MOTION OF THE DEBTORS PURSUANT TO 11 U.S.C. 105(A) AND 363(B) TO EMPLOY AND RETAIN FTI CONSULTING, INC. TO PROVIDE THE DEBTORS AN INTERIM TREASURER AND ADDITIONAL PERSONNEL NUNC PRO TUNC TO THE PETITION DATE I, J. Robert Medlin, make this declaration pursuant to 28 U.S.C. 1746 and state as follows: 1. I am a Senior Managing Director with FTI Consulting, Inc. ("FTI")2 a
financial advisory services and interim management firm with numerous offices throughout the country. I am duly authorized to make this declaration (the "Declaration") on behalf of FTI and submit this Declaration in support of the motion (the "Motion"), dated January 11, 2012, of the above captioned debtors and debtors in possession (collectively, the "Debtors") for entry of an order (the "Order") authorizing the Debtors to employ and retain FTI to provide the Debtors an Interim Treasurer and Additional Personnel nunc pro tunc to the Petition Date, pursuant to 11 U.S.C. 105(a) and 363(b) and under the terms and conditions set forth in the Motion.
The Debtors are the following six entities (the last four digits of their respective taxpayer identification numbers follow in parentheses): Hostess Brands, Inc. (0322), IBC Sales Corporation (3634), IBC Services, LLC (3639), IBC Trucking, LLC (8328),
Interstate Brands Corporation (6705) and MCF Legacy, Inc. (0599). 2 Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Motion.
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2.
Except as otherwise stated in this Declaration, I have personal knowledge
of the facts set forth herein and, if called as a witness, I would testify thereto. Certain of the disclosures set forth herein related to matters within the knowledge of other employees of FTI and are based on information provided by them. FTI's Qualifications 3. FTI has a wealth of experience in providing financial advisory services in
restructurings and reorganizations and enjoys an excellent reputation for services it has rendered in large and complex chapter 11 cases on behalf of debtors and creditors throughout the United States. 4. Furthermore, as a result of the prepetition work performed on behalf of the
Debtors over the past 6 months, FTI has acquired significant knowledge of the Debtors and their businesses and is intimately familiar with the Debtors' financial affairs and systems, capital structure, operations and related matters. Such experience and knowledge will be valuable to the Debtors in their efforts to reorganize. Accordingly, the Debtors wish to retain FTI to provide assistance during this case. 5. Prior to becoming a Senior Managing Director and Southwest Region
Leader of FTI, I was a Partner and Southwest Region Leader of the U.S. division of PricewaterhouseCoopers' Business Recovery Services Practice. I have previously represented borrowers, debtors, lenders, creditors and equity holders in formal bankruptcies and out-of-court restructurings. Some of my engagements include: Enron; Capmark; Baylor College of Medicine; Pillowtex; Zale Corporation; Eljer Industries; Lomas Financial; Big West Oil; TXCO; Age Refining; Reliant Channelview; Sunrise Energy; Global Power Equipment; Bag n baggage; Braun's Fashions; CompuAdd; Encompass; General Wireless; Rubus Realty; Sun Healthcare; El
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Paso Electric Company; Greyhound; Harvest Foods; Minorplanet; Promedco; TWA; U.S. One Communications; and SageCrest. Services To Be Provided 6. Subject to this Court's approval, FTI has agreed to provide the Debtors
with an Interim Treasurer, Additional Treasury Personnel and certain Additional Financial Personnel (collectively, the "Retention Personnel"). Among other things, the Retention
Personnel will provide assistance to the Debtors with respect to the management of the overall restructuring process, including the development of ongoing business/financial plans and conducting restructuring negotiations with creditors with respect to an overall strategy for their chapter 11 cases. 7. Pursuant to the Engagement Letter,3 FTI will provide such services as FTI
and the Debtors shall deem appropriate and feasible in order to manage and advise the Debtors in the course of the chapter 11 cases, including, but not limited to; Interim Treasury Management Function a. Provide comprehensive treasury services and coordinate and direct Company employees as necessary. David Rush, Senior Managing Director, will serve in the capacity of Interim Treasurer for a fixed monthly fee as described below; Work with management and employees to refine the Company's existing cash flow forecasts, related analyses and reporting. Provide any recommendations to existing practices and methodologies; and Provide additional FTI professionals to serve as Additional Treasury Personnel of the Company and provide support as required.
b.
c.
Provide FTI professionals to serve as Additional Financial Personnel of the Company to provide services as follows, and may be requested by the Company from time to time:
A copy of the Engagement Letter is attached as Exhibit A to the Motion.
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d.
Assist with the Company's execution of planned liquidity enhancement initiatives, including working capital management and cost savings programs; Develop the Company's integrated multi-year financial projection model by brand, business unit and region through coordination and discussion with management and Company employees; Perform a detailed assessment of the Company's operations, identify performance improvement opportunities and assist management and Company employees in implementing and executing the identified initiatives; Prepare other financial analysis and reporting as needed to assist management in negotiations and discussions with the Company's stakeholders; Participate in meetings and negotiations/interface with stakeholders and/or their advisors as necessary. Prepare a comprehensive winddown plan and related liquidation analysis with supporting schedules, and assist the Company in implementation of such plan, as necessary; Develop with management detailed contingency planning related to potential liquidity shortfalls or planned restructuring programs; Prepare Schedules of Assets & Liabilities and Statements of Financial Affairs, claims reconciliations and settlements, appropriate financial and operational cut-off periods, development of a creditor matrix, and first day motions support; Provide testimony as required; and Perform any other interim management services as mutually agreed upon. FTI's Disinterestedness
e.
f.
g.
h. i.
j. k.
l. m.
8.
In connection with the preparation of this Declaration, FTI conducted a
review of its contacts with the Debtors, their affiliates and certain entities holding large claims against or interests in the Debtors that were made reasonably known to FTI. A listing of the parties reviewed is reflected on Schedule 1 to this Declaration. FTI's review, completed under my supervision, consisted of a query of the Schedule 1 parties within an internal computer database
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containing names of individuals and entities that are present or recent former clients of FTI. While this review remains underway, a summary of such relationships that FTI has identified thus far during this process is set forth on Schedule 2 to this Declaration. Upon completion of our review, FTI will supplement this Declaration for any additional relationships identified.
9.
Except as discussed below, based on the results of its review thus far, FTI
does not have a relationship with any of the parties on Schedule 1 in matters related to these proceedings. FTI has provided and could reasonably be expected to continue to provide services unrelated to the Debtors' chapter 11 cases for the various entities shown on Schedule 2. FTI's assistance to these parties has been related to providing various financial restructuring, litigation support and/or engineering and scientific investigation consulting services. To the best of my knowledge, no services have been provided to these parties in interest which involve their rights in the Debtors' Chapter 11 Cases, nor does FTI's involvement in these chapter 11 cases compromise its ability to continue such consulting services. 10. FTI provided financial advisory services to the Official Unsecured
Creditors' Committee to Interstate Bakeries Corporation, the predecessor to Hostess Brands, Inc. FTI's services related to that engagement ended July 2, 2009. 11. Judge Gropper is related to an FTI employee who serves as a senior
consultant in our forensic and litigation consulting segment. He is not part of the engagement team and FTI will institute ethical wall procedures with respect to this FTI employee. 12. FTI provides litigation consulting services to Flowers Foods, Inc., which
is adverse to the Debtors, in Flowers Bakeries Brands, Inc. v. Interstate Bakeries Corporation (No. 1.08-CV-02376-TWT), filed in the Northern District of Georgia. The FTI engagement team for that assignment is separate from the engagement team for this engagement. Since June 10, 2011, the Retention Personnel have been under an engagement confidentiality agreement.
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Additionally, by a date not later than August 11, 2011, FTI established an ethical wall agreement ("Ethical Wall") in order to faithfully uphold its fiduciary duties. FTI required each member of the respective engagement teams to execute and return to FTI's Conflicts Manager an ethical wall agreement indicating:
a. There will be no discussions or communications (orally, electronically or otherwise) regarding the substances of the respective engagements between any persons who are or have been involved in the Engagement and the litigation matter described above; b. Only the persons working on matters involving the Engagement shall be provided access to non-public documents or information relating to the Engagement; and c. Further, FTI established electronic internal security walls to ensure that only FTI employees directly involved with or working on the Engagement may have access to the information, databases, e-mails, schedules or any other information of or relating to the Engagement. The FTI Security Administrator will monitor these software walls and related security periodically for compliance with the Ethical Wall procedures described in this agreement, and any attempted or actual breaches will be reported immediately to the applicable engagement Senior Managing Director; Eric Miller, General Counsel; and Kim Cornell, Conflicts Manager.
13.
As part of its diverse practice, FTI appears in numerous cases, proceedings
and transactions that involve many different professionals, including attorneys, accountants and financial consultants, who may represent claimants and parties-in-interest in the Debtors' chapter 11 cases. Also, FTI has performed in the past, and may perform in the future, advisory
consulting services for various attorneys and law firms, and has been represented by several attorneys and law firms, some of whom may be involved in these proceedings. In addition, FTI has in the past, may currently and will likely in the future be working with or against other professionals involved in these cases in matters unrelated to the Debtors and these cases. Based on our current knowledge of the professionals involved, and to the best of my knowledge, none of these relationships create interests materially adverse to the Debtors in matters upon which FTI is to be employed, and none are in connection with these cases. -6-
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14.
It is FTI's policy and intent to update and expand its ongoing relationship
search for additional parties in interest in an expedient manner. If any new material relevant facts or relationships are discovered or arise, FTI will promptly file a supplemental affidavit under Bankruptcy Rule 2014(a). Professional Compensation 15. As set forth in the Engagement Letter, fees in connection with this
Engagement (other than the treasury advisory function described below) will be based upon time incurred by the Additional Financial Personnel providing the Services, multiplied by our standard hourly rates, illustrated below: Senior Managing Directors Directors / Managing Directors Consultants / Senior Consultants Administrative / Paraprofessionals $780-895 $560-745 $280-530 $115-230
The Debtors understand that FTI revises its rates for services periodically, and the Debtors will pay such rates as reasonably adjusted without altering or limiting the Debtors' obligation to compensate FTI in accordance with the Engagement Letter. FTI does not provide any assurance regarding the outcome of its work and that its fees will not be contingent on the results of such work. 16. Prior to any increases in rates as set forth in paragraph 15 of this
Declaration, FTI shall file a supplemental affidavit with the Court and give ten business days' notice to the Debtors, the Office of the United States Trustee for the Southern District of New York (the "U.S. Trustee") and any official committee, which supplemental affidavit shall explain the basis for the requested rate increases in accordance with section 330(a)(3)(F) of the Bankruptcy Code and indicate whether the Debtors have received notice of and approved the proposed rate increase.
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17.
For services rendered in connection with the treasury advisor function of
the scope of services, the Debtors agree to pay FTI a monthly, non-refundable advisory fee of $65,000 for an Interim Treasurer (David Rush) and $55,000 per month each for two additional temporary employees serving as Additional Treasury Personnel (Larry Manning and Robert Molina). Payment of such fees is due and payable on the first business day of each month. 18. In addition to the fees outlined above, FTI will bill reasonable direct
expenses which are likely to be incurred on the Debtors' behalf during this Engagement. Direct expenses include reasonable and customary out-of-pocket expenses which are billed directly to the engagement such as certain telephone, overnight mail, messenger, travel, meals, accommodations and other expenses specifically related to the engagement. Further, if FTI and/or any of its employees are required to testify or provide evidence at or in connection with any judicial or administrative proceeding relating to this matter, FTI will be compensated by the Debtors at its regular hourly rates and reimbursed for reasonable direct expenses with respect thereto. 19. In addition to the fixed monthly rate and hourly fees and expenses, and as
more fully described in the engagement letter, subject to this Court's approval the Debtors have agreed to pay FTI a completion fee of $1,250,000 (the "Completion Fee"), upon the earliest occurrence of the following: a. b. 20. Confirmation of a Chapter 11 plan of reorganization or liquidation; or The sale of substantially all of the Debtors' assets.
For the avoidance of any doubt, FTI acknowledges that the Completion
Fee is subject to this Court's approval based on a reasonableness standard as provided in the Jay Alix Protocol. -8-
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21.
Prior to the Petition Date, the Debtors provided FTI with a retainer of The Retainer will be credited against any amounts due at the
$350,000 (the "Retainer").
termination of the Engagement Letter and returned to the Debtors upon the satisfaction of all obligations owed to thereunder. 22. According to FTI's books and records, during the 90 days prior to the
petition date, FTI received $1,520,040.48 in fees and expenses. As of the petition date FTI estimates they held Cash on Account of $350,000. The Debtors and FTI have agreed that any portion of the advance payments not used to compensate FTI for its prepetition services and expenses will be held and applied against its final post-petition billing and will not be placed in a separate account. 23. To the best of my knowledge, (a) no commitments have been made or
received by FTI with respect to compensation or payment in connection with these cases other than in accordance with the provisions of the Bankruptcy Code, and (b) FTI has no agreement with any other entity to share with such entity any compensation received by FTI in connection with these chapter 11 cases. 24. I have read the motion of the Debtors for an order approving the
employment and retention of FTI that accompanies this Declaration and, to the best of my knowledge, information and belief, the contents of such motion are true and correct.
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I declare under penalty of perjury that the foregoing is true and correct. Executed on January 11, 2012 FTI CONSULTING, INC. By: /s/ J. Robert Medlin Name: J. Robert Medlin Title: Senior Managing Director
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Schedule 1 to the Declaration
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SCHEDULE 1 OF DECLARATION Listing of Parties-In-Interest Reviewed for Current Relationships The Debtors Hostess Brands, Inc. IBC Sales Corporation IBC Services, LLC IBC Trucking, LLC Interstate Brands Corporation MCF Legacy, Inc. Names of Debtors Filing Petitions in the Debtors' Previous Chapter 11 Cases (And Not Identified Above) Armour and Main Redevelopment Corporation Baker's Inn Quality Baked Goods, LLC Interstate Bakeries Corporation Mrs. Cubbison's Foods, Inc. New England Bakery Distributors, L.L.C. All Other Names Used by the Debtors in the Previous Eight Years (Including Trade Names) Baker's Inn Beefsteak Bread du Jour Brown's Bakery Butter-Nut Butter-Nut Bakeries Colombo Bakery Continental Baking Company Cotton's Holsum Cotton's Holsum Bakeries Di Carlo Bakery Dolly Madison Dolly Madison Bakery Drake's Drake's Bakery Eddy's Eddy's Bakery Grandma Emilie's Grandma Emilie Brown's Bakery Holsum Bakery Home Pride Hostess Hostess Bakeries IBC Hostess Services, LLC Interstate Brands West Corporation Interstate Brands Companies J.J. Nissen Bakery Merita Merita Bakeries Millbrook Bakeries My Bread Bakery
SCHEDULE 1 Page 1 of 14
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Nature's Pride Pantry Pride Parisian Bakery San Francisco French Bread Company Sunbeam Sunbeam Bakery Sweetheart Sweetheart Bakery Standish Farms Weber's Bread Wonder Wonder Bakeries Wonder/Hostess Bakeries Current Directors and Officers of Hostess Brands, Inc. Altizer, Jeffrey Birgfeld, Steven D. Cahill, John T. Driscoll, Brian J. Duran, Michael Herenstein, Andrew J. Hobbs, Richard L. Kissick, Jr., Robert M. Knipp, Christopher J. Lavine, Lawrence N. Loeser, David A. Magill, Kent B. Minnetian, Christopher Murphy, Gregory B. Reganato, David Ross, Martha Seban, Richard C. Singer, Leonard Stewart, John O. Wandschneider, Gary K. Former Directors and Officers of Hostess Brands, Inc. Adams, Randall Flowers, Daniel R. Akeson, John C. Jung, Craig Lavelle, Timothy Lewis, Frank Mathews, Suresh Schneider, Bill Spielvogel, Scott Swanston, William Vance, J. Randall Verstraete, Stephany Current Directors and Officers of Debtors Other Than Hostess Brands, Inc. (And Not Identified Above)
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Angst, Daniel G. Bilello, Lawrence R. Cooper, Steven P. Dibble, James W. Walsh, Mark A. Hostess Brands, Inc. Equity Ownership Arrow Distressed Securities Fund Driscoll, Brian Gephardt Group Labor Advisory Services IBC Investors I, LLC IBC Investors II, LLC IBC Investors III, LLC Jung, Craig D. Mars & Co. Consulting LLC Monarch Debt Recovery Master Fund Ltd Monarch Opportunities Master Fund Ltd Monarch Income Master Fund Ltd McDonnell Loan Opportunity Ltd. Schultze Apex Master Fund, Ltd. Schultze Master Fund, Ltd. SPCP Group, LLC Ultimate Owners of the Debtors McDonnell Investment Management LLC Monarch Alternative Capital L.P. Ripplewood Holdings L.L.C. Silver Point Finance, LLC Certain Competitors of the Debtors Flowers Foods, Inc. George Weston Limited Grupo Bimbo, S.A. McKee Foods Corporation Sara Lee Corporation Debtors' Professionals and Service Providers Accenture LLP Arent Fox LLP Ernst & Young LLP ESIS Inc. Fisher & Phillips LLP FTI Consulting Houlihan Lokey Capital Inc. Jefferson Wells International Inc. Jones Day KPMG Lockton Companies LLC Kurtzman Carson Consultants LLC Mars & Co. Consulting LLC Marsh USA Inc.
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Perella Weinberg Partners LP Sitrick and Company Skadden Arps Slate Meagher & Flom Stinson Morrison Hecker Venable LLP Known Professionals for Certain Significant Nondebtor Parties in Interest Conway Del Genio Gries & Co., LLC Cravath, Swaine & Moore LLP Debevoise & Plimpton LLP Fulbright & Jaworski LLP Lazard Ltd. Locker Associates Inc. Glanzer & Co. LLC MAEVA Advisors, LLC Paul, Hastings, Janofsky & Walker LLP Paul, Weiss, Rifkind, Wharton & Garrison LLP Richards Kibbe & Orbe LLP Willkie, Farr & Gallagher LLP Major Secured Lenders Under The Debtors' Senior Secured Revolving Credit Facility And The Agents Thereunder GE Capital Markets, Inc. General Electric Capital Corporation (as Administrative Agent) Wells Fargo Bank, N.A. Major Secured Lenders Under The Debtors' First Lien Term Loan Facility And The Agents Thereunder Altai Capital Master Fund Ltd. Archer Capital Master Fund L.P. Archer SIF II LP Arizona State Retirement System BA/CSCredit 1 LLC Candlewood Credit Value Master Fund Cerberus Series Four Holdings, LLC Credit Suisse Loan Funding LLC Field Point III, Ltd. Field Point IV, Ltd. Gannett Peak CLO I, Ltd. Goldman Sachs Lending Partners LLC H Senior Income Fund LLC Hastings Master Fund LP HSBC Distressed Opportunities Master Fund Ltd. JPMorgan Chase Bank, N.A. McDonnell Loan Opportunity Ltd. Monarch Master Funding Ltd. Morgan Stanley Senior Funding, Inc. NB Distressed Debt Investment Fund Ltd. Schultze Apex Master Fund, Ltd. Silver Point Finance, LLC (as Administrative Agent) SPF CDO I, Ltd. Talamod Capital Partners, LP UBS AG, Stamford Branch
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VR Global Partners LP Major Secured Lenders Under The Debtors' Third Lien Term Loan Facility And The Agents Thereunder Arizona State Retirement System Arrow Distressed Securities Fund BA/CSCREDIT 1 LLC Bank of America, N.A. Candlewood Credit Value Master Fund II, L.P. Courage Special Situations Master Fund, LP CVP Distressed Fund LP Deutsche Bank Trust Company Americas Deutsche Bank, AG New York Branch H Senior Income Fund LLC HFR ED Courage Special Situations Master Trust Indonesian Shrimp Co. Lehman Commercial Paper Inc McDonnell Loan Opportunity Ltd. McDonnell Loan Opportunity Ltd. Monarch Master Funding Ltd. Morgan Stanley Senior Funding, Inc. Promethean Managers, LLC Rockview Trading Ltd. Schultze Apex Master Fund, Ltd. Schultze Master Fund, Ltd. Silver Point Finance, LLC (as Administrative Agent) SPCP Group, LLC The Bank of Nova Scotia Yucaipa American Alliance (Parallel) Fund I, LP Yucaipa American Alliance Fund I, LP Holders of 5% Secured Convertible PIK-Election Series A and B Notes and 10% Secured Convertible PIK-Election Series C Notes and the Indenture Trustee Thereunder Arrow Distressed Securities Fund Deutsche Bank AG New York Branch Deutsche Bank Trust Company Americas Hare & Co. IBC Investors I, LLC IBC Investors II, LLC IBC Investors III, LLC Indonesian Shrimp Co. J.P. Morgan Securities LLC (formerly Inc.) Lehman Commercial Paper Inc. McDonnell Loan Opportunity Ltd. Monarch Master Funding Ltd. Rockview Trading, Ltd. Schultze Apex Master Fund, Ltd. Schultze Master Fund, Ltd. SPCP Group, LLC Swiss Re Financial Products Corporation The Bank of Nova Scotia Yucaipa American Alliance (Parallel) Fund I, LP
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Yucaipa American Alliance Fund I, LP The Bank of New York Mellon Trust Company, N.A. (as Indenture Trustee) Additional Material Lienholders 7-11 Corporation APEX Cold Storage Baker Transfer & Storage Diversified Transfer and Storage #1423392 Glacier Cold Storage Groves Faison Hunter Creek Warehouse (Park Creek Venture) International Transit & Storage MBM Corp Merchandise Warehouse Millard Refrigerated Services Ress Properties (Kent Lindemuth Warehouse) Parties to Recent Material Transactions with the Debtors Lee & Associates Inc. Sugar Foods Corp. Debtors' Current and Former Depository and Disbursement Banks and Financial Institutions With Which the Debtors Maintain Accounts ADM Investor Services, Inc. Bank of America Bank of Oklahoma Bank of the West Banknorth MA Banknorth, N.A. Banknorth Vermont Columbus Bank & Trust Comerica Fifth Third Bank First National Bank of Alaska First Tennessee Bank Franklin Savings Bank Franklin Bank Harris Trust JP Morgan Chase National City Bank Penson GHCO PNC Bank RBC Bank Regions Bank Sovereign Bank United Missouri Bank Union Bank Wachovia Securities Wells Fargo Bank, N.A. Zions Bank
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Major Vendors of the Debtors ADM Inc. Ag Processing Amalgamated Sugars American Pan/Pan Glo American Yeast Bagcraft Barry Callebaut Bay State Milling Co. Blommer Chocolate Co. Bunge North America Calise & Sons Bakery Inc. Caravan Ingredients Cargill Inc. Cereal Food Processors Comdata Corporation Conagra Foods Dakota Specialty Danisco Delavau LLC Domino Sugar Flavor Solutions Fleischmann Yeast General Mills Glopak Groeb Farms HC Brill Hoogwegt International Molasses International Paper LeSaffre Yeast Loders Croklaan Main Street Ingredients Mallet Malnove Inc. of Nebraska Manildra Milling Manpower Inc. Michael's Foods Milner Milling National Starch Perfect Commerce Pliant Corp. Prestige Pak Inc. Roquette Siemer Milling Sonstegard Foods South Chicago Packing Co. Speedway Speedway SuperAmerica St. Johns Packaging Ltd. Tate and Lyle Public Limited Company
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TJ Harkings United Sugars Corp. UPS Debtors' 40 Largest Unsecured Creditors as Identified in the Debtors' Chapter 11 Petitions Accenture LLP ADM, Inc. Bakery & Confectionery Union & Industry International Pension Fund Bakery Drivers and Salesman Industry Pension Fund Berry Plastics Corp. Blommer Chocolate Co. Bunge North America Calise & Sons Bakery Inc. Caravan Ingredients Cargill Inc. Central Pension Fund of the IUOE Central States, Southeast and Southwest Areas Pension Plan Cereal Food Processors Chicago Display Marketing Corp. Cleveland Bakers and Teamsters Pension Fund Cloverhill Pastry Vending Corp. Comdata Corporation CSM Bakery Products Dakota Specialty Milling Delavau LLC General Mills I.A.M. National Pension Plan Independence Blue Cross Local 734 Pension Fund Lockton Companies LLC Malnove Inc. of Nebraska Manildra Milling Manpower Inc. MSC Industrial New England, Teamsters & Trucking Industry Pension Fund Northern New England Benefit Trust Ortran Inc. Philadelphia Bakery Employers & Food Driver Salesmens Union Local 463 & Teamsters Local 676 Pension Plan Retail, Wholesale & Department Store International Union and Industry Pension Fund Service Warehouse Corp. Southern California Bakery Security Fund Speedway Superamerica LLC The Goodyear Tire & Rubber Co. United Sugars Corp. Western Conference of Teamsters Pension Plan Significant Utility Providers Access Point Alabama Power Amerada Corporation Ameren Illinois
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AT&T City of Emporia City of Seattle ComEd Matrix Telecom Inc. Nicor Gas Northwestern Energy Passaic Valley Sewerage Southwest Gas Corp. The Gas Company Township of Wayne Verizon Water Revenue Bureau (Philadelphia, PA) Xcel Energy Beneficiaries and Issuers of Letters of Credit ACE American Insurance Company Comerica Bank Director of Rhode Island Workers Compensation Florida Power & Light Company Florida Self-Insurers Guaranty Association, Inc. Hartford Fire Insurance Company Kansas Dept. of Human Resources Louisiana Department of Labor Ohio Bureau of Workers Compensation Oklahoma Workers' Compensation Court Peoples Gas System Self-Insurance Division, Bureau of Workers' Compensation (Harrisburg, PA) State of Connecticut State Of Michigan Tampa Electric Company Travelers Casulty & Surety Company of America Travelers Indemnity Company United States Fidelity and Guaranty Company Counterparties to Hedging Arrangements AG Processing Inc. Archer-Daniels-Midland Company Bartlett Milling Bay State Milling Co. Blommer Chocolate Co. Bunge North America Cereal Food Processors Conagra Foods Horizon Milling, LLC Mennel Milling Co. Milner Milling Co. Roquette America Inc. Siemer Milling Co. Major Lessors and Related Entities
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17201 Figueroa LLC Aircraft Bolt Corp. APC Capital Partners Boise Capital Partners Bristol Properties Inc. Brookdale Properties LLC Carson Madrona Co. LLC Century Warehousing Inc. CRP Institutional Investors LP Darwin C. Parrish Sonja G. Parr Donald J. Bruzzone Donna J. Bruzzon Eastgroup Properties LP Future Home Inc. JSLB LLC MBWCA VII Associates Inc. Park Creek Venture Piedmont Operating Partnership LP Prologis TLF (Las Vegas) LLC Russo Development LLC S&D Wells Investments LLC Seminary Road LLC Severson Ranch Partnership Thompson Road Associates LLC VT One LLC National Unions Representing Significant Number of Debtor Employees Bakery, Confectionery, Tobacco Workers & Grain Millers International Union. International Brotherhood of Teamsters Parties to Other Significant Contracts with the Debtors Banc of America Merchant Services, LLC Oce Imagistics, Inc. Oce North America Common Carriers, Customs Brokers and Warehousemen to the Debtors ABF Freight Services CR England Inc. CH Robinson Worldwide Fleet Global Services Inc. Greatwide Dedicated Transport HLN Services International Transit & Storage Interstate Distributor Co. Kansas Continental Express Ortran Inc. RDG Truckin LCC Redline Select Space Strive Logistics
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The Custom Companies Totem Ocean Trailer Express Universal Am-Cam Ltd. YRC Inc. Parties to Litigation with the Debtors Baker, Kara Bernhard, Kimberly Blackshear, Venus Blood, Curtis Boyle, George Brooks, Anthony Browder's Maximum Security ATS Connecticut Dep't of Labor Investigation Dewitt, Donna Flowers Bakeries Brands Inc. Gallion, Ola Hall, Derek Halvorson, Cora Hedback, John A. Henderson, Tyrone Johnson, Adam Jones, Bryan Kaye, William S. Lorenz (Kuhn), Lizette Loy, Timothy Lucchesi, Richard Madera, Ana Matter, Marc Mazim's Nutricare (d/b/a Papa Pita Bakery) McKinzy, Michael, Sr. Northwest Administrators OneBeacon Insurance Company Pigford, Michael Rutherford, Lewis, Sr. Scheinfeld, Craig Scott, Alice Turner, LeJuan Werwinski, Charlene Whitfield, Charles Zielinski, Todd Parties to Material License Agreements with the Debtors Alaska Pride Baking Company American Bakers Cooperative Delavau, LLC Evrilholder Products, LLC Gonzales Enterprises, Inc. d/b/a Fifth Sun Graphics International Foods Company Rasta Imposta, Inc. Sara Lee Corp. (successor to Heilman Baking Company)
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SBC Services Sun-Maid Growers of California The Federated Group The Long Company Major Insurers and Insurance Brokers ACE American Ins. Co. Allied World Assurance Co. American International Specialty Lines Ins. Co. Arch Insurance Co. Darwin Select Ins. Co. Fireman's Fund Ins. Co. Illinois Union Ins. Co. Lexington Ins. Co. Liberty Mutual Fire Ins. Co. Lloyd's of London Lockton Companies LLC Marsh USA Inc. Princeton Excess & Surplus Lines Ins. Co. RSUI Indemnity Co. Safety National Casualty Corp. St. Paul Fire & Marine Ins. Co. Travelers Property Casualty Co. of America XL Insurance America, Inc. Major Benefits Administrators Blue Cross Blue Shield Broadspire Services Inc. Cigna Behavioral Health Delta Dental Insurance Co. Eyemed Vision Care (ECPA) Employer Self Insurance Service (ESIS) John Eastern Company M&I Trust Co. Principle Life Insurance Co. Vision Service Plan - IC Additional Third Party Administrators ADP, Inc. Harland Technology Services Significant Multi Employer Pension Plans Alaska Teamster-Employer Pension Plan Automobile Mechanics Local No. 701 Union and Industry Pension Fund Automotive Industries Pension Plan Automotive Machinist Pension Plan Bakers Local No. 433 Pension Plan Bakery & Confectionery Union & Industry International Pension Fund Bakery and Sales Drivers Local Union 33 Industry Pension Fund Bakery Drivers and Salesman Local 550 and Industry Pension Fund Bakery Drivers and Salesmen Local 194 and Industry Pension Fund
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Central Ohio UFCW Unions and Retail Employers Pension Plan Central Pension Fund of the IUOE & Participating Employers Central States, Southeast and Southwest Areas Pension Plan Cleveland Bakers and Teamsters Pension Fund District No. 9, International Association of Machinists and Aerospace Workers Pension Plan Employer-Teamsters Local Nos. 175 & 505 Pension Plan I.A.M. National Pension Plan Indiana Teamsters Pension Fund Pension Plan IUOE Stationary Engineers Local 39 Pension Local 734 Pension Fund Milwaukee Drivers Pension Plan New England Teamsters & Trucking Industry Pension Fund New York State Teamsters Conference Pension & Retirement Fund Oregon Retail Employees Pension Plan Philadelphia Bakery Employers & Food Driver Salesmens Union Local 463 & Teamsters Local 676 Pension Plan Retail, Wholesale & Department Store International Union and Industry Pension Fund Richmond Teamsters & Industry Pension Plan Sound Retirement Trust (f/k/a Retail Clerks Pension Plan) Teamsters Local 639 Employers Pension Trust Teamsters Negotiated Pension Plan Teamsters Union Local 142 Pension Trust Fund Teamsters Union Local No. 52 Pension Fund The National Conference of Firemen and Oilers National Pension Fund Twin Cities Bakery Drivers Pension Fund UFCW - Northern California Employers Joint Pension UFCW District Union Local Two and Employers Pension Plan (f/k/a Kansas City Area Retail Food Store Employees Pension Plan) United Food & Commercial Workers Unions & Employers Midwest Pension Fund United Food and Commercial Workers Unions and Employers Pension Plan Upstate New York Bakery Drivers and Industry Pension Fund Western Conference of Teamsters Pension Plan Western Pennsylvania Teamsters and Employers Pension Plan Bankruptcy Judges for the Southern District of New York Chief Judge Arthur J. Gonzalez Judge Stuart M. Bernstein Judge Shelley C. Chapman Judge Robert D. Drain Judge Robert E. Gerber Judge Martin Glenn Judge Allan J. Gropper Judge Sean H. Lane Judge Burton R. Lifland Judge Cecelia G. Morris Judge James M. Peck The Attorneys for the United States Trustee's Office for the Southern District of New York Davis, Tracy Hope Gasparini, Elisabetta Golden, Susan Khodorovsky, Nazar
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Masumoto, Brian S. Morrissey, Richard C. Nakano, Serene Schwartz, Andrea B. Schwartzberg, Paul K. Riffkin, Linda A. Velez-Rivera, Andy Zipes, Greg M.
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Schedule 2 to the Declaration
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SCHEDULE 2 OF DECLARATION Parties-In-Interest Noted for Court Disclosure The Debtors Hostess Brands, Inc. IBC Sales Corporation IBC Services, LLC IBC Trucking, LLC Interstate Brands Corporation Names of Debtors Filing Petitions in the Debtors' Previous Chapter 11 Cases (And Not Identified Above) Armour and Main Redevelopment Corporation Baker's Inn Quality Baked Goods, LLC Interstate Bakeries Corporation Mrs. Cubbison's Foods, Inc. New England Bakery Distributors, L.L.C. All Other Names Used by the Debtors in the Previous Eight Years (Including Trade Names) Holsum Bakery IBC Hostess Services, LLC Sunbeam Wonder Current Directors and Officers of Hostess Brands, Inc. Hobbs, Richard L. Magill, Kent B. Former Directors and Officers of Hostess Brands, Inc. Lewis, Frank Schneider, Bill Current Directors and Officers of Debtors Other Than Hostess Brands, Inc. (And Not Identified Above) Angst, Daniel G. Hostess Brands, Inc. Equity Ownership Arrow Distressed Securities Fund Gephardt Group Labor Advisory Services IBC Investors I, LLC IBC Investors II, LLC IBC Investors III, LLC Monarch Debt Recovery Master Fund Ltd Monarch Opportunities Master Fund Ltd McDonnell Loan Opportunity Ltd. Schultze Master Fund, Ltd. SPCP Group, LLC Ultimate Owners of the Debtors McDonnell Investment Management LLC Monarch Alternative Capital L.P. Ripplewood Holdings L.L.C.
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Silver Point Finance, LLC Certain Competitors of the Debtors Flowers Foods, Inc. George Weston Limited Grupo Bimbo, S.A. McKee Foods Corporation Sara Lee Corporation Debtors' Professionals and Service Providers Accenture LLP Arent Fox LLP Ernst & Young LLP ESIS Inc. Fisher & Phillips LLP FTI Consulting Jefferson Wells International Inc. Jones Day KPMG Lockton Companies LLC Kurtzman Carson Consultants LLC Marsh USA Inc. Perella Weinberg Partners LP Sitrick and Company Skadden Arps Slate Meagher & Flom Stinson Morrison Hecker Venable LLP Known Professionals for Certain Significant Nondebtor Parties in Interest Conway Del Genio Gries & Co., LLC Cravath, Swaine & Moore LLP Debevoise & Plimpton LLP Fulbright & Jaworski LLP Paul, Hastings, Janofsky & Walker LLP Paul, Weiss, Rifkind, Wharton & Garrison LLP Willkie, Farr & Gallagher LLP Major Secured Lenders Under The Debtors' Senior Secured Revolving Credit Facility And The Agents Thereunder GE Capital Markets, Inc. General Electric Capital Corporation (as Administrative Agent) Wells Fargo Bank, N.A. Major Secured Lenders Under The Debtors' First Lien Term Loan Facility And The Agents Thereunder Archer Capital Master Fund L.P. Arizona State Retirement System BA/CSCredit 1 LLC Cerberus Series Four Holdings, LLC Credit Suisse Loan Funding LLC Field Point III, Ltd. Field Point IV, Ltd. Gannett Peak CLO I, Ltd.
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Goldman Sachs Lending Partners LLC HSBC Distressed Opportunities Master Fund Ltd. JPMorgan Chase Bank, N.A. McDonnell Loan Opportunity Ltd. Monarch Master Funding Ltd. Morgan Stanley Senior Funding, Inc. NB Distressed Debt Investment Fund Ltd. Silver Point Finance, LLC (as Administrative Agent) SPF CDO I, Ltd. UBS AG, Stamford Branch Major Secured Lenders Under The Debtors' Third Lien Term Loan Facility And The Agents Thereunder Arizona State Retirement System Arrow Distressed Securities Fund BA/CSCREDIT 1 LLC Bank of America, N.A. Deutsche Bank Trust Company Americas Deutsche Bank, AG New York Branch Lehman Commercial Paper Inc McDonnell Loan Opportunity Ltd. McDonnell Loan Opportunity Ltd. Monarch Master Funding Ltd. Morgan Stanley Senior Funding, Inc. Schultze Master Fund, Ltd. Silver Point Finance, LLC (as Administrative Agent) SPCP Group, LLC The Bank of Nova Scotia Yucaipa American Alliance (Parallel) Fund I, LP Holders of 5% Secured Convertible PIK-Election Series A and B Notes and 10% Secured Convertible PIK-Election Series C Notes and the Indenture Trustee Thereunder Arrow Distressed Securities Fund Deutsche Bank AG New York Branch Deutsche Bank Trust Company Americas Hare & Co. IBC Investors I, LLC IBC Investors II, LLC IBC Investors III, LLC J.P. Morgan Securities LLC (formerly Inc.) Lehman Commercial Paper Inc. McDonnell Loan Opportunity Ltd. Monarch Master Funding Ltd. Schultze Master Fund, Ltd. SPCP Group, LLC Swiss Re Financial Products Corporation The Bank of Nova Scotia Yucaipa American Alliance (Parallel) Fund I, LP The Bank of New York Mellon Trust Company, N.A. (as Indenture Trustee) Debtors' Current and Former Depository and Disbursement Banks and Financial Institutions With Which the Debtors Maintain Accounts
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Bank of America Bank of Oklahoma Bank of the West Banknorth, N.A. Columbus Bank & Trust Comerica Fifth Third Bank First Tennessee Bank Franklin Bank Harris Trust JP Morgan Chase National City Bank PNC Bank RBC Bank Regions Bank Sovereign Bank Union Bank Wachovia Securities Wells Fargo Bank, N.A. Zions Bank Major Vendors of the Debtors ADM Inc. Ag Processing American Pan/Pan Glo American Yeast Bagcraft Barry Callebaut Bay State Milling Co. Blommer Chocolate Co. Bunge North America Cargill Inc. Cereal Food Processors Comdata Corporation Conagra Foods Danisco General Mills Glopak Groeb Farms International Molasses International Paper LeSaffre Yeast Mallet Manildra Milling Manpower Inc. Michael's Foods Milner Milling National Starch Roquette Siemer Milling Sonstegard Foods
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Speedway Speedway SuperAmerica St. Johns Packaging Ltd. Tate and Lyle Public Limited Company United Sugars Corp. UPS Debtors' 40 Largest Unsecured Creditors as Identified in the Debtors' Chapter 11 Petitions Accenture LLP ADM, Inc. Berry Plastics Corp. Blommer Chocolate Co. Bunge North America Cargill Inc. Cereal Food Processors Comdata Corporation General Mills Independence Blue Cross Lockton Companies LLC Manildra Milling Manpower Inc. MSC Industrial Ortran Inc. Retail, Wholesale & Department Store International Union and Industry Pension Fund Service Warehouse Corp. Speedway Superamerica LLC The Goodyear Tire & Rubber Co. United Sugars Corp. Western Conference of Teamsters Pension Plan Significant Utility Providers Alabama Power Amerada Corporation AT&T City of Seattle ComEd Nicor Gas Northwestern Energy Southwest Gas Corp. The Gas Company Verizon Xcel Energy Beneficiaries and Issuers of Letters of Credit ACE American Insurance Company Comerica Bank Florida Power & Light Company Florida Self-Insurers Guaranty Association, Inc. Hartford Fire Insurance Company Ohio Bureau of Workers Compensation State of Connecticut
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State Of Michigan Tampa Electric Company Travelers Casulty & Surety Company of America Travelers Indemnity Company United States Fidelity and Guaranty Company Counterparties to Hedging Arrangements AG Processing Inc. Archer-Daniels-Midland Company Bay State Milling Co. Blommer Chocolate Co. Bunge North America Cereal Food Processors Conagra Foods Horizon Milling, LLC Mennel Milling Co. Milner Milling Co. Roquette America Inc. Siemer Milling Co. Major Lessors and Related Entities Darwin C. Parrish Eastgroup Properties LP Piedmont Operating Partnership LP National Unions Representing Significant Number of Debtor Employees International Brotherhood of Teamsters Parties to Other Significant Contracts with the Debtors Banc of America Merchant Services, LLC Common Carriers, Customs Brokers and Warehousemen to the Debtors CH Robinson Worldwide Ortran Inc. The Custom Companies Totem Ocean Trailer Express Universal Am-Cam Ltd. YRC Inc. Parties to Litigation with the Debtors Connecticut Dep't of Labor Investigation OneBeacon Insurance Company Parties to Material License Agreements with the Debtors Sara Lee Corp. (successor to Heilman Baking Company) SBC Services Sun-Maid Growers of California Major Insurers and Insurance Brokers Allied World Assurance Co. American International Specialty Lines Ins. Co.
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Arch Insurance Co. Fireman's Fund Ins. Co. Lexington Ins. Co. Liberty Mutual Fire Ins. Co. Lloyd's of London Lockton Companies LLC Marsh USA Inc. RSUI Indemnity Co. Safety National Casualty Corp. St. Paul Fire & Marine Ins. Co. Travelers Property Casualty Co. of America XL Insurance America, Inc. Major Benefits Administrators Blue Cross Blue Shield Broadspire Services Inc. Cigna Behavioral Health Additional Third Party Administrators ADP, Inc. Significant Multi Employer Pension Plans Automobile Mechanics Local No. 701 Union and Industry Pension Fund Employer-Teamsters Local Nos. 175 & 505 Pension Plan Retail, Wholesale & Department Store International Union and Industry Pension Fund United Food & Commercial Workers Unions & Employers Midwest Pension Fund United Food and Commercial Workers Unions and Employers Pension Plan Upstate New York Bakery Drivers and Industry Pension Fund Western Conference of Teamsters Pension Plan Bankruptcy Judges for the Southern District of New York Chief Judge Arthur J. Gonzalez Judge Stuart M. Bernstein Judge Shelley C. Chapman Judge Robert D. Drain Judge Robert E. Gerber Judge Martin Glenn Judge Allan J. Gropper Judge Sean H. Lane Judge Burton R. Lifland Judge Cecelia G. Morris Judge James M. Peck The Attorneys for the United States Trustee's Office for the Southern District of New York Davis, Tracy Hope Gasparini, Elisabetta Golden, Susan Khodorovsky, Nazar Masumoto, Brian S. Morrissey, Richard C. Nakano, Serene
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Schwartz, Andrea B. Schwartzberg, Paul K. Riffkin, Linda A. Velez-Rivera, Andy Zipes, Greg M.
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EXHIBIT D [Proposed Order]
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ORDER AUTHORIZING THE DEBTORS PURSUANT TO 11 U.S.C. 105(A) AND 363(B) TO EMPLOY AND RETAIN FTI CONSULTING, INC. TO PROVIDE THE DEBTORS AN INTERIM TREASURER AND ADDITIONAL PERSONNEL NUNC PRO TUNC TO THE PETITION DATE Upon the Motion (the "Motion")2 of the above-captioned debtors (collectively, the "Debtors") for the entry of an order (the "Order") authorizing the Debtors to (i) employ and retain FTI Consulting, Inc. ("FTI") to provide an Interim Treasurer and Additional Personnel for the Debtors nunc pro tunc to the Petition Date pursuant to sections 105(a) and 363 (b) title 11 of the United States Code (the "Bankruptcy Code") and (ii) obtain certain related relief; the Court having reviewed the Motion and the Declaration of J. Robert Medlin in support thereof and having considered the statements of counsel and the evidence adduced with respect to the Motion at a hearing before the Court (the "Hearing"); the Court having found that (a) the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334; (b) venue is proper in this district pursuant to 28 U.S.C. 1408 and 1409; (c) this is a core proceeding pursuant to 28 U.S.C. 157(b); and (d) notice of the Motion and the Hearing was sufficient under the
The Debtors are the following six entities (the last four digits of their respective taxpayer identification numbers follow in parentheses): Hostess Brands, Inc. (0322), IBC Sales Corporation (3634), IBC Services, LLC (3639), IBC Trucking, LLC (8328), Interstate Brands Corporation (6705) and MCF Legacy, Inc. (0599).
Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Motion.
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circumstances; after due deliberation the Court having determined that the relief requested in the Motion is necessary and essential for the Debtors' reorganization and such relief is in the best interest of the Debtors, their estates and their creditors; and good and sufficient cause having been shown; IT IS HEREBY ORDERED THAT: 1. 2. The Motion is GRANTED as set forth herein. Except as set forth herein, the terms of the Engagement Letter are
reasonable terms and conditions of employment and are hereby approved. 3. The Debtors are authorized, effective as of the Petition Date, to employ and
retain FTI, on the terms described in the Motion. 4. With respect to the Completion Fee provided for in the Motion, FTI
acknowledges that the Completion Fee is subject to Court approval based on a reasonableness standard as provided in the Jay Alix Protocol. 5. Notwithstanding the indemnification provisions in the Engagement Letter,
the Debtors and FTI have agreed that the Debtors shall only indemnify those FTI employees serving as executive officers of the Debtors on the same terms as provided to the Debtors' other officers and directors under the Debtors' by-laws and applicable state law, along with insurance coverage under the Debtors' directors' and officers' insurance policies, and the indemnification provisions of the Engagement Letter shall not apply to FTI. 6. Prior to any increases in rates as set forth in paragraph 15 of this
Declaration, FTI shall file a supplemental affidavit with the Court and give ten business days' notice to the Debtors, the Office of the United States Trustee for the Southern District of New York and any official committee, which supplemental affidavit shall explain the basis for the
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requested rate increases in accordance with section 330(a)(3)(F) of the Bankruptcy Code and indicate whether the Debtors have received notice of and approved the proposed rate increase. 7. The Debtors are authorized to take all actions necessary to effectuate the
relief granted pursuant to this Order and in accordance with the Motion. 8. The terms and conditions of this Order shall be immediately effective and
enforceable upon its entry. 9. The Court retains jurisdiction with respect to all matters arising from or
related to the implementation of this Order. Dated: White Plains, New York _________________, 2012 UNITED STATES BANKRUPTCY JUDGE
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In Re Hostess Brands

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Chapter 11 Case No. 12-_____ (___) (Jointly Administered)

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Because their workforce is heavily unionized, the Debtors also participate

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After months of bargaining, the Debtors were unable to reach agreement

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In addition, the Debtors are not seeking to retain FTI as a professional

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Dated: January 11, 2012 New York, New York

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EXHIBIT A [Engagement Letter]

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EXHIBIT B [Dispute Resolution Procedures]

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EXHIBIT C [Declaration of J. Robert Medlin]

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Chapter 11 Case No. 12-_____ (___) (Jointly Administered)

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Except as otherwise stated in this Declaration, I have personal knowledge

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A copy of the Engagement Letter is attached as Exhibit A to the Motion.

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In connection with the preparation of this Declaration, FTI conducted a

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As part of its diverse practice, FTI appears in numerous cases, proceedings

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For services rendered in connection with the treasury advisor function of

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$350,000 (the "Retainer").

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Schedule 1 to the Declaration

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Chapter 11 Case No. 12-___ (_) (Jointly Administered)

Chapter 11 Case No. 12-___ (_) (Jointly Administered)

Chapter 11 Case No. 12-___ (_) (Jointly Administered)