Interstate Bakeries Corp. filed for bankruptcy on Wednesday after struggling with more than $1.3 billion in debt and weak demand for bread products amid the popularity of low-carbohydrate diets.
The largest U.S. wholesale bakery, maker of Wonder bread and Hostess Twinkies, also accepted the resignation of James Elsesser as chairman and chief executive, according to the Chapter 11 filing in the U.S. Bankruptcy Court for the Western District of Missouri in Kansas City.
The company named Leo Benatar as nonexecutive chairman and Antonio Alvarez as chief executive, according to court papers. Alvarez is managing director of the turnaround firm Alvarez & Marsal, which was hired to assist Interstate in restructuring.
Interstate said it would seek court approval for a debtor-in-possession financing facility not to exceed $200 million.
The company said earlier this month its lenders had allowed additional borrowing on its revolving credit line but the facility required the company to file its fiscal 2004 financial statements by Sept. 26. The company’s fiscal year ended May 29.
Interstate has delayed filing its annual report twice because of uncertainty over its upcoming financial results and whether it will be in compliance with certain debt covenants during its fiscal year 2005.
Kansas City, Missouri-based Interstate, along with other food companies, has been hurt by decreased demand for bread and pastries due to the popularity of low-carbohydrate diets.
Furthermore, the U.S. Securities and Exchange Commission launched an accounting probe into the company in July, looking into how it set workers’ compensation and other reserves.