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Hostess Says It Will Liquidate If Strikers Don’t Return (Read More…)

By Dawn McCarty and Bill Rochelle on November 15, 2012

Hostess Brands Inc., the maker of Wonder bread and Twinkies, said it will shut down and liquidate unless enough members of its striking bakery workers’ union return to work today to resume normal operations.

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9 after a bankruptcy judge in White Plains, New York, imposed contract concessions that 92 percent of the union’s workers rejected.

“We don’t have the financial wherewithal, nor the manpower, to sustain operations through a strike,” Chief Executive Officer Gregory Rayburn said today in an interview with Betty Liu on “In The Loop” on Bloomberg Television.“Frankly, customers won’t sit back and tolerate out-of-stock positions in their stores.”
Hostess closed three of its 36 plants permanently Nov. 12, blaming the strike, and about 13 plants are operating “unsustainably” because of worker shortages,

Rayburn said. The bakers union has “made no demands, and in fact they stopped returning our calls about a month ago,” he said.

Rayburn yesterday said Hostess will file court papers tomorrow asking for authorization to shut the company down entirely on Nov. 20. It will ask the judge to hold a liquidation hearing Nov. 19, he said.

Liquidation would mean the loss of 18,000 jobs, Rayburn said. It’s now up to the bakery workers “to decide if they want to call off the strike and save the company, or cause massive financial harm to thousands of employees and their families,”Rayburn said in a statement.
Affected Plants

Hostess previously said that the strike was affecting 23 of 36 plants. The union, which said it represents about 5,000 Hostess workers, went on strike over what it called the“unilateral imposition of a horrendous contract.”

“Despite Greg Rayburn’s insulting and disingenuous statements of the last several months, the truth is that Hostess workers and their union have absolutely no responsibility for the failure of this company,” BCTGM International Union President Frank Hurt said today in a statement. “That responsibility rests squarely on the shoulders of the company’s decision makers,” Hurt added.

The Teamsters Union voted to accept a new contract with 8 percent in wage concessions and 17 percent in benefit reductions.

Voluntary Concessions

A reorganization plan filed in the court last month can’t be implemented without selling some assets or obtaining new financing. The Teamsters and the bakery workers’ union made voluntary concessions in the first Chapter 11 reorganization, which began in 2004.

Hostess, based in Irving, Texas, filed under Chapter 11 for a second time in January, listing assets of $982 million against liabilities totaling $1.43 billion.

The new case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains). The prior bankruptcy was In re Interstate Bakeries Corp., 04-45814, U.S. Bankruptcy Court, Western District of Missouri (Kansas City).

Posted by Admin on 11/20 at 03:28 PM
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