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Twinkies maker agrees to private mediation
Source: Agencies |
November 21, 2012, Wednesday
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HOSTESS Brands Inc agreed in court to enter private mediation with its lenders and leaders of a striking union to try to avert the liquidation of the maker of Twinkies snack cakes and Wonder Bread.
Hostess, its lenders and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union agreed to mediation on Monday at the urging of Bankruptcy Judge Robert Drain of the Southern District of New York, who advised against a more expensive, public hearing regarding the company's liquidation.
"My desire to do this is prompted primarily by the potential loss of over 18,000 jobs as well as my belief that there is a possibility to resolve this matter," Drain said.
The 82-year-old Hostess was seeking permission to liquidate its business, claiming that its operations have been crippled by a bakers strike and that winding down is the best way to preserve its dwindling cash. Hostess suspended operations at all of its 33 plants across the United States last week as it moved to start selling assets.
Heather Lennox, a lawyer for Hostess, said it would be hard for Hostess to recover from the damage it sustained due to the strike even if an agreement was forthcoming. Yet following the hearing, Hostess Chief Executive Officer Gregory Rayburn said that there was always a chance Hostess could be saved.
"I think we have to see what unfolds," Rayburn said. "My impression is that the judge wants to understand the parties' positions and some of their logic, but it doesn't change our financial position."
The BCTGM called the strike on November 9 after Hostess sought and won court approval to impose wage and benefit cuts. Unlike other unions representing workers at Hostess, the BCTGM did not contest Hostess's action -- which allowed it to reject a collective bargaining agreement and impose its offer.
Given the fact that the union did not fight Hostess's motion in court, Judge Drain said it was "somewhat unusual to say the least, and perhaps illogical" that the union would then strike against it.
"Its an odd approach," Drain said. "Before thousands of people are put out of work it would seem to me worthwhile for both the union and the debtors to explore why that happened."
Analysts have said Hostess' brands, which also include Nature's Pride, Dolly Madison and Drakes, are expected to draw interest from rivals, including Flowers Foods, Pepperidge Farm owner Campbell Soup Co and Mexico's Grupo Bimbo. Private equity firm Metropolous & Co said last Friday it was interested in pursuing the company.
Hostess, its lenders and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union agreed to mediation on Monday at the urging of Bankruptcy Judge Robert Drain of the Southern District of New York, who advised against a more expensive, public hearing regarding the company's liquidation.
"My desire to do this is prompted primarily by the potential loss of over 18,000 jobs as well as my belief that there is a possibility to resolve this matter," Drain said.
The 82-year-old Hostess was seeking permission to liquidate its business, claiming that its operations have been crippled by a bakers strike and that winding down is the best way to preserve its dwindling cash. Hostess suspended operations at all of its 33 plants across the United States last week as it moved to start selling assets.
Heather Lennox, a lawyer for Hostess, said it would be hard for Hostess to recover from the damage it sustained due to the strike even if an agreement was forthcoming. Yet following the hearing, Hostess Chief Executive Officer Gregory Rayburn said that there was always a chance Hostess could be saved.
"I think we have to see what unfolds," Rayburn said. "My impression is that the judge wants to understand the parties' positions and some of their logic, but it doesn't change our financial position."
The BCTGM called the strike on November 9 after Hostess sought and won court approval to impose wage and benefit cuts. Unlike other unions representing workers at Hostess, the BCTGM did not contest Hostess's action -- which allowed it to reject a collective bargaining agreement and impose its offer.
Given the fact that the union did not fight Hostess's motion in court, Judge Drain said it was "somewhat unusual to say the least, and perhaps illogical" that the union would then strike against it.
"Its an odd approach," Drain said. "Before thousands of people are put out of work it would seem to me worthwhile for both the union and the debtors to explore why that happened."
Analysts have said Hostess' brands, which also include Nature's Pride, Dolly Madison and Drakes, are expected to draw interest from rivals, including Flowers Foods, Pepperidge Farm owner Campbell Soup Co and Mexico's Grupo Bimbo. Private equity firm Metropolous & Co said last Friday it was interested in pursuing the company.
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