(Moneywatch) Hostess, owner of iconic brands like Twinkies and Wonder Bread, is said to be assessing bids for its assets from dozens of parties amid news that management used funds for workers' pensions to keep the company afloat.
Bloomberg reported that the bankrupt baking company has received offers from a range of potential buyers. At one end are retail and grocery giants such as Wal-Mart (WMT) and Krogers (KR), commercial bakeries Grupo Bimbo SAB and Alpha Baking, and C. Dean Metropoulos & Co., the private equity firm that owns Pabst Brewing.
A spokesman for Hostess declined to comment on the report.
At the other end are individuals like Don Sheridan, an accountant from of Wellesley, Mass., who sent a handwritten, five-page letter on loose-leaf notebook paper saying why he should get a chance to bid. Other, equally quixotic bids were promised from a number of other individuals, although those submissions haven't been confirmed yet.
There is even a "crowdfunding" effort underway at the website DoughForHostess.com which in just two weeks received $2 million in unofficial financial commitments, according to organizer Spencer Clark. While this illustrates the considerable consumer affection for Hostess' brands, it is nowhere nearly enough to even buy Ding Dongs. Analysts have estimated that for creditors the company's liquidation could generate $1 billion.
As the sale process unfolds, reports have surfaced of questionable actions by management in the run-up to Hostess' bankruptcy.
Earlier this week, the Wall Street Journal quoted Hostess CEO Gregory Rayburn as saying that the company had diverted employee wages earmarked for pensions for other purposes. "I think it's like a lot of things in this case ... it's not a good situation to have," he told he paper.
Hostess said in 2011 that it would stop making pension contributions. That angered many employees and was a a major factor in the International Brotherhood of Teamsters and the Bakery, Confectionery, Tobacco and Grain Millers International decision to strike. Management decided to liquidate the company following that vote.
Rayburn, who became chief executive in March, said he did not find out about the wage diversion until shortly before the company shut down. He told the Journal, "Whatever the circumstances were, whatever those decisions were, I wasn't there."