Rain
49°
Rain
Hi 50° | Lo 43°

Twinkies maker Hostess lives at least another day

FILE - In this Friday, Nov. 16, 2012, file photo, Twinkies baked goods are displayed for sale at the Hostess Brands' bakery in Denver, Colo. Hostess Brands Inc. and its second largest union will go into mediation to try and resolve their differences, meaning the company won't go out of business just yet. The news came Monday, Nov. 19, 2012, after Hostess moved to liquidate and sell off its assets in bankruptcy court citing a crippling strike last week. (AP Photo/Brennan Linsley)

FILE - In this Friday, Nov. 16, 2012, file photo, Twinkies baked goods are displayed for sale at the Hostess Brands' bakery in Denver, Colo. Hostess Brands Inc. and its second largest union will go into mediation to try and resolve their differences, meaning the company won't go out of business just yet. The news came Monday, Nov. 19, 2012, after Hostess moved to liquidate and sell off its assets in bankruptcy court citing a crippling strike last week. (AP Photo/Brennan Linsley)

Twinkies will live to see another day.

Hostess Brands Inc. and its second largest union agreed yesterday 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 today, with the liquidation hearing set to resume tomorrow 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.”

In an interview following the hearing, Hostess CEO Gregory Rayburn said that there is enormous financial pressure to come to an agreement with the union by the end of the day today.

He noted that it’s costing Hostess about $1 million a day in payroll costs alone to stay alive, with the money mostly going toward management to unwind the company. About 18,000 workers were sent home Friday after the company shuttered its 33 plants, meaning no sales are being generated.

“We didn’t think we had a runway, but the judge just created a 24-hour runway,” said Rayburn, who added that even if a contract agreement is reached, it’s unclear whether all Hostess plants will get up and running again.

Hostess, weighed down by debt, management turmoil, rising labor costs and the changing tastes of Americans, decided on Friday that it no longer could make it through a conventional Chapter 11 bankruptcy restructuring. Instead, the company, which is based in Irving, Texas, asked the court for permission to sell its assets and wind down its business.

Legacy Comments1

As Hostess Brand Inc. descended into economic ruin, executives at the company made sure to give themselves six-figure raises. The company filed paperwork to liquidate its assets late last week, and will attend a hearing in front of a bankruptcy judge in New York, Monday (Nov. 19), yet gave its big wigs up to 300 percent salary increases. According to a union claim, a large portion of revenue loss that resulted the firing of more than 18,000 workers, went to raises. Greg Rayburn, who was later promoted to CEO, reportedly received a salary bump from $750,000 a year to well over $2 million. However a spokesperson for the company maintains that Rayburn's salary was only $100,000 a month. Roughly nine other executives were given raises, including a pay increase from $500,000 to $900,000, and another from $375,000 to $656,256. Read more at http://hiphopwired.com/2012/11/19/hostess-brand-execs-clocked-six-figure-raises-amid-crumbling-twinkie-empire/#ewHMZ4VhTUECu8FE.99 And now they have stated they will continue production in Canada and just drive products over the border.

Post a Comment

You must be registered to comment on stories. Click here to register.