Bankruptcy Judge Orders Hostess And Union To Mediation

The future of Twinkies, Ho-Ho’s and other Hostess products is not fully written yet. The judge in Hostess’s bankruptcy case has directed the company and its second largest union, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, to private mediation. The company announced last week that it was shutting down due to a crippling strike.

WHITE PLAINS, N.Y. (AP) — Twinkies will live to see another day.

Hostess Brands Inc. and its second largest union agreed on Monday to try to resolve their differences after a bankruptcy court judge noted that the parties hadn’t gone through the critical step of private mediation. That means the maker of the spongy cake with the mysterious cream filling won’t go out of business yet.

The news comes after the maker of Ho Ho’s, Ding Dongs and Wonder Bread last week moved to liquidate and sell off its assets in bankruptcy court. Hostess cited a crippling strike started on Nov. 9 by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents about 30 percent of Hostess workers.

‘‘Many people, myself included, have serious questions as to the logic behind this strike,’’ said Judge Robert Drain, who heard the case in the U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y. ‘‘Not to have gone through that step leaves a huge question mark in this case.’’

The mediation talks are set to take place Tuesday, with the liquidation hearing set to resume on Wednesday if an agreement isn’t reached. Jeff Freund, an attorney for the bakers union, said any guess as to how the talks will go would be “purely speculative.”

Even if Hostess shuts down the iconic Hostess brands will survive in some form. Other bakery companies are lining up to purchase the brands…

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  • joeyangtree

    “This data is important in framing the discussion of both how Obama won and how Romney lost. I intend to explore a variety of theories in separate posts over the coming days.” — Doug Johnson (11/08/2012)

    I guess you’re still working up those theories…

    • 914

      Please try to stay on subject.

      • joeyangtree

        Just trying to hold pundits accountable for the promises that they make and the analysis that they do. I don’t mean to disrupt the important national discussion of the fate of Twinkies snack cakes, but it seems like Doug has abandoned the task that *he* publicly set for *himself*. While this blog has a very low standard of accountability (see Drummond, DJ), I’m interested in seeing if any of the writers believe in it. A frivolous post like this one, one of the first from this author in 2 weeks, seems like the perfect place to ask this question.

        • 914

          There is nothing ‘frivolous’ about this post?

          • joeyangtree

            By volume, this post is 60%-70% a direct quote from an AP article. The “analysis” above the AP quote is basically a shorter restatement of what is in the quote, copying many of the exact same terms from the original article, like “crippling strike”, “private mediation”, and “Bakery, Confectionery, Tobacco Workers and Grain Millers International Union”.

            The “analysis” after the quote is a restatement of the summary of the last paragraph of the AP article:

            “Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers. The company says several potential buyers have expressed interest in the brands. Although Hostess’ sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies along brought in $68 million so far this year.”

            Articles that add absolutely nothing to a discussion are “frivolous” in my book. Perhaps you have another word or phrase that you would prefer: “phoned-in”, “lazy”, “useless”, “pointless”, “unnecessary” — take your pick.

  • jim_m

    Boy, I hope that they can save the jobs of all those underpaid union members

    Top Ten Highest Paid Leaders

    Name Title Total Compensation
    FRANK HURT PRESIDENT $262,654.00

    17% of the union employees make over $160k. 53% of the union employees make over $75,000 while the workers make $44,000. Maybe the corrupt douche bags in the union HQ should take a freaking pay cut. Who are the real greedy jerks destroying this country? The unions.

    • herddog505

      Lefties will respond that the senior management at Hostess was being (shall we say?) quite generous with their own pay and benefits packages, and they’d have a point. It’s damned hard to have sympathy for a company when its managment is making out like bandits while asking the rank and file to take pay cuts.

      That being said, I’d just LOVE to know what these union hoodlums think they do that warrants being paid upwards of a quarter-mil per year (plus whatever bennies they get). I can understand a union needing to hire a few professionals, mostly attorneys to go over contracts. But what need have they to pay millions for presidents, secretaries, etc?

      • jim_m

        I find it interesting that the lefty trolls here have made numerous allegations that Hostess’s problems are due to rapacious private equity firms buying the company, selling off the assets and leaving the remainder in poor condition. However, if one goes to the company’s Wikipedia entry, one finds that nothing of the sort has ever taken place. In fact the company has done far more taking over than being taken over and was only taken over once by a company that divested of everything else in order to make itself Hostess Brands.

        Once again we see the failure of the lefty narrative. Hostess’s problems are not from greedy private equity firms. They are from bad management and from a changing market environment, which includes high costs of doing business like the sugar tariff.

      • JWH

        It’s damned hard to have sympathy for a company when its managment is making out like bandits while asking the rank and file to take pay cuts.

        A stand that I take in a lot of labor disputes. At a well-run company, management (including, even especially c-level executives) will take pay cuts at the same time that they cut pay for line-level employees during economic times. If you’re a low-level employee, it’s easier to stomach pay cuts if you can see that the leaders are willing to make sacrifices for the company as well.

        I also once read of a CEO of a midsized company (around 1,000 employees or so) who, instead of accepting his $1 million bonus for the year, directed that it be apportioned equally to the company’s employees. That’s the kind of thing that builds loyalty.

    • Carl

      Who are the real greedy jerks destroying this country?

      The Mitt Romney styled Bain-like corporate raiders, of course. Why else would Jim be blaming hard-working Americans?

      At least Karl Rove gets paid for being a corporate toady Jim. What’s your motivation – besides hate?

      Forbes Magazine reports:

      More than a few observers say they know who to blame for the demise of the iconic company: the Bakery, Confectionary, Tobacco Workers and GrainMillers International union, which represents thousands of striking Hostess Brand workers who have refused to accept a new contract that would do everything from slash their salaries to their retirement

      Time for a reality check.

      Hostess has been sold at least three times since the 1980s, racking
      up debt and shedding profitable assets along the way with each
      successive merger. The company filed for bankruptcy in 2004, and again
      in 2011. Little thought was given to the line of products, which,
      frankly, began to seem a bit dated in the age of the gourmet cupcake.
      (100 calorie Twinkie Bites? When was the last time you entered Magnolia Bakery and asked about the calorie count?)

      As if all this were not enough, Hostess Brands’ management gave
      themselves several raises, all the while complaining that the workers
      who actually produced the products that made the firm what money it did
      earn were grossly overpaid relative to the company’s increasingly dismal
      financial position.

      The corporate Mis-Managers just keep taking food out of the mouths of the workers and their families – the union said it has to end, and the line we’re at now was drawn.

      That would be the corporate Mis-Managers that gave themselves a raise just before filing for bankruptcy protection.

      They squeezed the companies and their employees until the squeezing wasn’t effective anymore, and are now trying to line their own pockets “MIttRomney-style” before pushing the employees out onto the street.

      When your management style is focused on draining a company rather than building (or in this case ‘rebuilding)’ a company and a brand, this is what you get. Hostess products are un-healthy, and in this day and age unhealthy foods are not a good business model.

      So Twinkies and Ho-hos go the way of the horse and carriage. Who’s surprised?

      3 cheers for the union for holding the line. I wish them well.

      • jim_m

        Ripplewood Holdings was going to lose $170,000,000 in the restructuring. Attorneys and other creditors were going to give up $60,000,000 in claims against the company.

        The greedy Baker’s union put 11,000 other workers out of jobs so they could make an additional $3250 per year while the other workers were taking pay cuts.

        the union turned down a 25% equity stake in the company and 2 seats on the board of directors.

        The only people refusing to give on this were the baker’s union. The Teamsters compromised. Ownership was losing money. Creditors were losing money.

        try to see past your ideology and recognize that the union fat cats making a quarter million a year are the bad guys here. How do you justify the union leadership making $260,000 per year while their members lose their jobs and pensions? What concessions was the union willing to make in their dues that would have lessened the impact of the pay cuts to their members? I will bet nothing.

        Oh, and since the best bet is that product rights are bought out of bankruptcy and production is moved to Mexico, what has the union gained other than putting its members in poverty for the benefit of the leadership?

        • JWH

          try to see past your ideology and recognize that the union fat cats making a quarter million a year are the bad guys here. How do you justify the union leadership making $260,000,000

          Might want to move that decimal point a few spots there.

          • jim_m

            Thanks. Fixed above

      • Vagabond661

        “Who are the real greedy jerks destroying this country?”

        Easy answer Carl, who is the largest employer in this country? Who asks for more and more and more each year with a proven track record of failure? Who forces its “employees” to accept “benefits” but then exempts themselves (and their donors) from those same “benefits”?

      • 914

        “”Who are the real greedy jerks destroying this country?”

        That would be BIG government.

      • cubanbob

        Brilliant, Carl. Sheer genius. You gonna give them a job? The union gonna give them a job? When the company folds you can wish them well but are you going to cut the out of work striker’s a check? Let the union put it’s money where it’s mouth is and buy the company’s estate and then run the business profitably.

  • Vagabond661

    There are so many unions, it’s hard to paint them all with a broad brush and say they are all bad. In the Hostess case, the Teamsters Union had agreed to concessions. It was one of the other unions who pitched a fit.

    Unions like any business can get greedy and feed on the host (or hostess) until it dies.

    • jim_m

      I think that their plan was to resist any negotiations with the expectation that the company’s assets would be bought out of bankruptcy. The problem with that strategy is that the best suitors for the company are all from Mexico, where cost of materials is far lower and there are no unions.

      The unions turned down a 25% equity stake in the company and two seats on the board. Ownership and other creditors stood to lose $230 Million in the restructuring. I’m having a hard time seeing why I should feel sorry for the 20005000 baker’s union workers who are holding the other 16,000 11,0000 workers hostage.

      [edited to correct union membership]

    • UOG

      This is all in round numbers. Hostess has 18,500 employees. Of those 6,000 are unionized. Of the union employees the majority are Teamsters. I’ve read that it not a close split with the between the Teamsters and the BCTWGM but have found no enrollment figures for the two unions.

      So, the intransigence of a couple of thousand employees over pay and retirement co-payment cuts would cost the other 16,000 employees their jobs and benefits. Even with managements failures something is missing form the equation. We don’t have all the facts in play. My impression is that’s what the judge is questioning.

      • jim_m

        The pension and wage concessions would have amounted to $200 Million in savings.

      • Vagabond661

        I would agree we don’t know all the facts. What Jim said about selling off the company in bankruptcy may be their plan all along and that’s why they didn’t got to private arbitration. In these dealings, black and white is less defined.

  • JWH

    To be honest, I can’t shed many tears over Hostess’s likely demise. If people stopped eating as many Twinkies and Ding-Dongs, yet Hostess kept producing them … well, that’s the way the free market crumbles.