WHITE PLAINS, N.Y. —
Twinkies won’t die that easily after all.
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 after Hostess moved to liquidate and sell off its assets in bankruptcy court citing a crippling strike last week.
The bankruptcy judge hearing the case said Monday that the parties haven’t gone through the critical step of mediation and asked the lawyer for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which has been on strike since Nov. 9, to ask his client, who wasn’t present, if the union would agree to participate. The judge noted that the bakery union, which represents about 30 percent of Hostess workers, went on strike after rejecting the company’s latest contract offer, even though it never filed an objection to it.
“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.”
Hostess and the union agreed to mediation talks, which are expected to begin the process on Tuesday.
In an interview after the hearing on Monday, CEO Gregory Rayburn said that the two parties will have to agree to contract terms within 24 hours of the Tuesday since it is costing $1 million a day in overhead costs to wind down operations. But even if a contract agreement is reached, it is not clear if all 33 Hostess plants will go back to being operational.
“We didn’t think we had a runway, but the judge just created a 24-hour runway,” for the two parties to come to an agreement, Rayburn said.
Hostess, weighed down by debt, management turmoil, rising labor costs and the changing tastes of America, 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 assets and go out of business.
It’s not the sequence of events that the maker of Twinkies, Ding Dongs and Ho Ho’s envisioned when it filed for bankruptcy in January, its second Chapter 11 filing in less than a decade. The company, who said that it was saddled with costs related to its unionized workforce, had hoped to emerge with stronger financials. It brought on Rayburn as a restructuring expert and was working to renegotiate its contract with labor unions.
But Rayburn wasn’t able to reach a deal with the bakery union. The company, which had been contributing $100 million a year in pension costs for workers, offered workers a new contract that would’ve slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits. But the bakery union decided to strike.
By that time, the company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which urged the bakery union to hold a secret ballot on whether to continue striking. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn’t enough to keep operations at normal levels.
Rayburn said that Hostess was already operating on razor thin margins and that the strike was the final blow. The company’s announcement on Friday that it would move to liquidate prompted people across the country to rush to stores and stock up on their favorite Hostess treats. Many businesses reported selling out of Twinkies within hours and the spongy yellow cakes turned up for sale online for hundreds of dollars.
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.
WHITE PLAINS, N.Y. —
Twinkies won’t die that easily after all.
Area residents pessimistic about state of the economy
Joplin’s employment rate is better than the statewide average, but many area residents “still feel like they’re in a recession,” an economist told a group of public officials and business leaders today.
Netflix tops 50M subscribers as 2Q earnings soar
Netflix’s second-quarter earnings more than doubled as new episodes from a hit series helped the Internet video service surpass 50 million worldwide subscribers for the first time.
Detroit retirees back pension cuts by a landslide
A year after filing for bankruptcy, Detroit is building momentum to get out, especially after workers and retirees voted in favor of major pension changes just a few weeks before a judge holds a crucial trial that could end the largest public filing in U.S. history.
US stocks climb as earnings reports roll in
Solid earnings for a range of companies helped nudge the stock market higher in early Tuesday trading.
Beef pollutes more than pork, poultry, study says
Raising beef for the American dinner table does far more damage to the environment than producing pork, poultry, eggs or dairy, a new study says.
Comic-Con offers toy designers a chance to go wild
When it comes to designing the highly coveted collectible toys for sale at Comic-Con, the annual celebration of pop culture lifting off Thursday in San Diego, the sky’s the limit for the designers at Mattel.
US stock slip to start the week; Six Flags sinks
The stock market drifted lower to start the week as more companies line up to post their quarterly earnings.
Springfield utility getting energy from solar farm
City Utilities in Springfield is receiving some power from a solar farm in Greene County and will soon begin looking for customers willing to pay higher prices to receive some of their power from solar energy.
US stocks close higher; Time Warner soars
Major stock indexes rebounded Wednesday, finishing higher for the third time in four days and lifting the Dow Jones industrial average to its second record close this month.
La-Z-Boy announces corporation promotion
La-Z-Boy Incorporated announced recently the promotion of Daniel King to president of its retail segment. King has served as vice president of La-Z-Boy's retail operations since July 2011.
- More Business Headlines
- Area residents pessimistic about state of the economy