Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York in White Plains on Tuesday, April 17, approved a 90-day extension of the company's exclusive right to file a plan and solicit acceptances to it, to Aug. 8 and Oct. 7, respectively, a company spokesman said.

Before the extension was granted, the Irving, Texas, debtor had until May 10 to file a plan and until July 9 to solicit acceptances.

Hostess in court papers April 3 said it needed more time because it was still negotiating with its unions on new collective-bargaining agreements. Hostess didn't expect a decision on its request to terminate the current CBAs before its exclusivity was set to run out.

A trial on the issue began Tuesday and extended into Thursday, with the unions calling witnesses to testify Thursday, the company spokesman said.

Hostess also said it needed time to complete a search for an investor to finance its emergence from Chapter 11. Some 14 parties have executed confidentiality agreements, and interested investors submitted a first round of proposals on Feb. 27. Hostess expects a second round during the week of May 7.

The debtor on Monday, arguing in support of its exclusivity motion, said its two key unions -- the International Brotherhood of Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union -- each seemed to favor a different potential investor, which led it to believe the loss of exclusivity could result in several plans -- its own, one from each of the unions and one from lenders.

"As the debtors have made substantial progress in moving toward a plan thus far, there is no need to invite such potential chaos, heightened acrimony among the creditors and excessive fees," Hostess asserted.

Finally, the debtor said it was pursuing a "fail-safe" sale process in case it fails to modify the CBAs. The company has said such a result would force its liquidation.

Hostess' official committee of unsecured creditors had opposed an exclusivity extension, asserting the company was headed for a liquidation. The committee cited a lack of progress in labor negotiations; Hostess' failure to share with the committee a plan or bidding procedures; and a provision that requires potential investors to deal only with the debtor.

Hostess refuted the arguments, asserting the committee "turns a blind eye to the substantial progress made by the debtors in these cases in only three months."

Hostess filed for Chapter 11 for the second time in less than eight years on Jan. 11 because of sliding financial performance, strained liquidity, excessive debt, aging infrastructure and a need to lower labor and legacy costs.