Millers brace for ramifications of liquidation

by World Grain Staff
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TEUTOPOLIS, ILLINOIS, U.S. — Flour millers and other ingredient suppliers are grappling with the uncertain consequences of the pending liquidation of Hostess Brands, Inc.
The company, trying to emerge from Chapter 11 bankruptcy, had said it would cease operations and commence a liquidation process if striking workers do not return to work by the end of the day Nov. 15.
For the flour milling industry, bankruptcy is not especially familiar territory, said Richard C. Siemer, president of Siemer Milling Co., Teutopolis, Illinois, U.S.
“We don’t have a lot of bankruptcy experience in milling,” Siemer said. “I can only recall a few in the decades I’ve been a miller, and one of those was Hostess.”
Hostess remains a significant customer of Siemer Milling, a status shared by many milling companies. While debtor-in-possession financing offers suppliers assurance and a high degree of protection, “We certainly may be at risk,” he said.
Siemer already has sustained losses from the two Hostess bankruptcy filings of the past several years,. Siemer said.
“We sold our receivables for 85% the first time and 65% the second time,” he said. “And I was relieved to get the 65%.”
Siemer attributed the Hostess problems to a long history of management missteps coupled with union intransigence.
While dragging out a liquidation would be undesirable, a sudden shutdown could make a terrible situation even worse, Siemer said.
“On the one hand getting it over quickly is doing us a favor,” he said. “On the other, it they really close down, they stand to lose real value. Get Twinkies off the shelves for a couple of weeks and people will forget about them.”
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