Hostess Company/ BCTGM Union Mediation Crumbles, Fate of its Employees Hangs in Limbo

Yesterday’s mediation between the Hostess company and it’s employees’ union (the Bakery, Confectionery,  Tobacco, and Grain Millers Union) crumbled in the hands of the presiding bankruptcy judge like a stale Zinger snack cake well past its expiration date.  The Hostess (R) brand Company has been -despite its financial woes of the last several years – powered by hundreds of distribution centers, bakeries and outlets that spread around the country, including Southern California.

As of Wednesday Morning, Nov. 21, almost 19,000 Hostess employees are still without jobs and left anxiously pondering the unexpected results of their union strike:the bankruptcy of the Hostess (R) Brands Company and the end of its 82 year run as one of America’s best-known food companies. Photo courtesy of Lee Bailey. Copyright 2012.

A bankruptcy judge on the case had declared that the dueling parties would have to go through mediation, before Hostess Inc. would be allowed to sell off its assets. However, efforts between the company and employees’ Union failed dismally yesterday, so the Hostess Company will return to bankruptcy court this morning (Wednesday, November 21) to once again make its case for liquidating and selling off its assets.

This leaves roughly 19,000 workers at the Texas-based company without jobs as of this morning…and pondering with sad, anxious faces what future employment opportunities await them in this struggling U.S. economy (see video below):!

The sudden and unexpected loss of employment at Hostess has been especially devastating to its delivery truck drivers, since none of them at any point have gone on strike against the company (see video below):

The mediation – ordered by Judge Robert Drain – appeared doomed from the start, as an eager line of potential buyers formed virtually overnight, among them Bimbo Grupo, Hurst Capital, Flowers Foods and Sun Capital Partners.

Judge Robert D. Drain of the Federal Bankruptcy Court for the Southern District of New York had pushed hard for the two sides to attempt one last round of negotiation talks. The judge expressed genuine concerns that neither side had exhausted all their efforts to avoid the impending liquidation of Hostess Brands. Judge Drain had especially urged the bakery union to seek mediation, informing such that it might face significant legal claims from Hostess if the company was forced to liquidate.

Prior to yesterday’s attempted mediation, bankruptcy Judge Robert Drain had urged Hostess and the union to mediate. Said Judge Drain: “I’m giving the union, as well as the debtor and their lenders, a chance to work out their issues in private. “If they don’t take it, it’s not that the issues won’t be worked out. They will, but it will be done in public and in an expensive way.”

The Hostess (R) Brand Company said it would have no further comment before a bankruptcy hearing scheduled for today at 11 a.m. EST Wednesday in White Plains, N.Y.

As reported last Friday, the Hostess Company claimed a union strike ruined its operations and announced plans to lay off all its approximately 19,000 employees immediately. The company blamed a strike by BCTGM union members for its decision to close. Hostess workers who walked off their jobs fired back at the company, accusing Hostess of boosting executive pay while plundering worker benefits and slashing employees’ wages.

As previously reported, Hostess President and CEO Gregory Rayburn said that the strike was the final straw for the company, because it had been operating on paper-thin profit margins. The bakers’ union have responded to Rayburn’s allegations by blaming mismanagement, including the company’s sizable debt and recent enormous raises awarded to its company’s executives last year, as the company headed for its second bankruptcy filing.

Earlier in the day, union President Frank Hurt (who had declined to attend the mediation talks) had said from his Columbus, Ohio, home: “I am not too optimistic about this mediation.” The union, which represents only about 30% of the company’s approximately 19,00 workers (the current exact number is unclear) walked out Nov. 9. Hostess closed its 33 plants on Friday and sent workers home, as it sought court approval to liquidate its iconic  brands and sell its assets.

Some of the Hostess (R) Company’s various brands that its rival companies are interested in acquiring. Photo courtesy of John R. Coughlin/ CNN Money. Copyright 2012.

In the meantime, Wall Street bankers have declared that Hostess’ rivals, including Mexico’s Grupo Bimbo and Flowers Foods, were “very likely to be interested in parts, but not all of, the Hostess brands.” As of this writing, Private equity firms – including Sun Capital Partners and Metropoulos & Co. – are also expressing interest in acquiring at least some of the various Hostess brands.


Shirley Pena

About Shirley Pena

A native of Southern California, Shirley Peña began her career as a music journalist almost twenty years ago, writing for her websites "Stars In My Eyes: the Girlhowdy Website" and "La Raza Rock!" and progressed to creating various fan sites on Yahoo, including the first for New Zealand singer/songwriter Tim Finn. From there, she became a free agent, arranging online interviews for Yahoo fan clubs with various music artists (Andy White, John Crawford, Debora Iyall, John Easdale, etc.). She also lent her support in creating and moderating a number of Yahoo fan clubs for various music artists from the 1990s-today. As a music journalist, Shirley Peña has contributed to a number of magazines (both hard copy and online), among them: Goldmine, American Songwriter, Classic Drummer Magazine and UK-based Keyboard Player (where she was a principal journalist). A self-confessed "fanatic" of 1960s "British Invasion" bands, Classic Rock and nostalgic "Old Hollywood ", she also keeps her finger on the pulse of current trends in music, with a keen eye for up and coming artists of special merit. Shirley Peña loves Los Angeles, and is thrilled to join the writing staff of The Los Angeles Beat!
This entry was posted in Food, News & Sports and tagged , , , , . Bookmark the permalink.

Leave a Reply