Intellectual Property Partner Paul Llewellyn Weighs In on the Hostess Shutdown in Law360

Law360 is covering the recent decision of Hostess Brands Inc. to liquidate and shut down operations in light of a lengthy employee strike. The company had previously filed for bankruptcy in January and may now sell off several of their valuable brands to competitors in the food industry as part of the proceedings. However, selling off entire branches of the company, including bakeries and distribution centers, would require the new owners to pay the striking bakery workers at least part of the unfunded pension liability the unions claim is owed to Hostess employees.

According to Kaye Scholer Partner Paul Llewellyn, co-head of the firm’s Trademark, Copyright and False Advertising practice, it might be more profitable for prospective buyers to focus on purchasing the intellectual property rights rather than the assets of the company.

"To pick up the brand name and product formula is much more clean than picking up an entire division of the company," Llewellyn says. "There could be a lot of value just in the trademark value."