Hostess Brands and Labor Union Failed to Reach an Agreement in Mediation

by San Antonio Attorney

Hostess Brands said that it did not reach a new agreement with the labor union, and union officials said the management pointed out it would move forward with its liquidation plans.

The maker of Twinkies snack cake said that it would not give additional information before the 11 a.m. hearing on Wednesday. During Monday’s hearing, Bankruptcy Judge Robert D. Drain was looking to save the jobs of 18,500 employees at Hostess. The judge forced both sides to talk with a mediator in the hopes of narrowing their differences.

Hostess announced last week that it plans to wind down its operations, after a bakery workers’ strike started on Nov. 9 at the majority of its bakeries.

The company has been asserting that its labor expenses were not sustainable and so it had to lower its salary, pension and health costs in order to stay afloat. But the labor union hesitated, saying that Hostess was improperly managed and that it would most certainly face liquidation for a second time.

A settlement deal was reached by Hostess and Teamsters in September. The Teamsters accepted an 8% reduction of wage, a 17% reduction in health coverage contributions, and a suspension of the pension payments.

But the bakery workers’ union said many times that they cannot agree on such large concessions because according to them they can pull down wages and benefits in the industry, while there is no guarantee for the survival of Hostess. The president of the union criticized the private equity firms for not investing enough to modernize the bakeries and improve product offerings of the company.

Hostess had over $860 million in liabilities early this year. In fiscal year 2012, the company had $2.5 billion in revenue and $1.1 billion net loss.

 

– If you can no longer save your failing business or you see no chance of making it through, then a business liquidation may be the option for you. In a Chapter 7 bankruptcy you sell the assets of your business, pay as much debt as is possible and move forward. Outstanding debts are discharged by the bankruptcy court. A San Antonio Chapter 7 attorney can help you ensure the best possible outcome of your case.

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