KANSAS CITY, MO. (CN) – Directors of Interstate Bakeries Corp. – owner of the Hostess, Wonder and Dolly Madison brands – sold $100 million in bonds by promising buyers could rely on the company’s financial statements, then filed for bankruptcy less than six weeks later, “claiming that its internal financial systems were so unreliable that its financial statements had to be radically restated,” investors claim in Jackson County Court.
The alleged negligent misrepresentations came in 2004.
“IBC is one of the nation’s largest wholesale bakeries and distributors of fresh baked bread and sweet goods under various national brands including Wonder, Hostess, Dolly Madison, Baker’s Inn, Merita and Drake’s,” the complaint states.
Plaintiff R2 Investments says it holds $70 million of IBC’s notes. Lead defendant Michael J. Anderson is former IBC chairman of the board. Also sued are IBC directors and officers G. Kenneth Baum, Leo Benatar, Robert Calhoun, Frank Horton, Richard Metrick, Ronald Thompson, and James Elsesser.
R2 wants the $70 million it paid for the notes. Its lead counsel is Joanne Stutz of Shawnee, Kan.