Hedge Fund sues for Twinkies

We’d heard of the Twinky Defense – a San Francisco sicko politico shot another politico in cold blood and blamed it on his Twinky-rich diet – but this is our first Twinky suit. Brencourt, a $1.8 billion hedge fund holding some 8.4 percent, or 3.8 million shares of Interstate, said it is concerned with the company's "declining operating performance" as it restructures under Chapter 11 bankruptcy protection, according to a letter accompanying the suit.

The suit, filed in the Chancery Court of Delaware, seeks to compel the Kansas City, Missouri-based company to hold a shareholders' meeting to elect new directors.

Brencourt said the company hasn't held an annual meeting since September, 2003, in violation of Delaware law, where the company is incorporated.

"IBC's current situation is the culmination of years of bad management and board neglect," said Brencourt Chief Executive William Collins in a letter to Interstate. "IBC needs a new, capable board with the skills to properly oversee the company's reorganization and operational turnaround."

Interstate filed for Chapter 11 in the Western District of Missouri in September, 2004.

The maker of Wonder bread, Hostess Twinkies and Drake's cakes this month disclosed that it offered to settle a previously disclosed U.S. Securities and Exchange Commission investigation into how it accounts for workers compensation and other reserves.

It also said the SEC's Division of Enforcement had recommended canceling Interstate's common stock if the company continues to be delinquent in filing required financial reports. It said it is currently late in filing its fiscal 2006 reports.

Brencourt, which joined the court-mandated Committee on Equity Holders for the Interstate bankruptcy case in September, said competing companies have "managed to thrive through the low-carb craze" that Interstate has blamed for its travails. It also said that it is "particularly egregious" that Interstate has operated without a chief financial officer for a decade.

Egregious isn't exactly the word we'd pick for a totally screwed up company like this one.

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-11-07T215515Z_01_N07433906_RTRIDST_0_FINANCIAL-INTERSTATE-HEDGE.XML