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Management turnover in a Chapter 11 case is often unavoidable, especially when lenders end up with a majority stake in a reorganized entity. In such cases, one of the stipulations of the deal is that the buyer gets to put its representatives on a revamped board of directors.
Though this may cause many executives to grumble, Tammy Young, president and CEO of bankrupt La Bonita Ole Inc., has taken a completely different tack. La Bonita Ole, which makes flour, corn and whole wheat tortillas, has been operating under bankruptcy protection since July 16, 2008. However, in a statement posted on Wednesday, the company said that it "may be facing a permanent shift in owner/management," with lender SunTrust Bank hoping to sell the company. Documents filed with the U.S. Bankruptcy Court for the Middle District of Florida in Tampa indicated that two competing plans have been filed in the case -- one by SunTrust and the other by the debtor. Should SunTrust's plan go through, Young would lose her stake, and Jeffrey Granger would be appointed the debtor's president and only director. But Young isn't going to go quietly. La Bonita has launched a "Save The Tortillas!" campaign to help her keep ownership of the company and current management intact. The campaign includes Wednesday's statement, a Web site She seems to be targeting SunTrust, specifically. "Wouldn't it be cool as heck if SunTrust could become a banking hero ... keeping one more American entrepreneur in business instead of out of business?" Young says in a video posted on the Web site. Young is hoping that the campaign generates "an overwhelming show of public support for the company and her cause" leading up to the confirmation hearings for the two plans on Aug. 19, according to Wednesday's statement. As for SunTrust, the bank appears none too pleased. It already filed a motion in court asking that La Bonita halt the "false and misleading information" it's disseminating on the Web site and its accompanying links. The motion was partly approved and partly denied on July 1, pending certain modifications to the information. But the Web site and the videos are still going strong. It'll be interesting to see if Young's embarrassment strategy works, especially since she doesn't seem the least bit humiliated herself about La Bonita being in bankruptcy to begin with. - Ben Fidler
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