BIDDEFORD — Mediation on Tuesday between Hostess Brands, Inc. and the bakers union failed, leaving liquidation of the company as the likely outcome, though it’s possible all or the some of the company could be sold. Meanwhile, workers are seeking options in the likely event their jobs are eliminated.
Today, the company will resume a hearing regarding liquidation of the company at U.S. Bankruptcy Court for the Southern District of New York.
The hearing that began Monday adjourned so that the parties could hold mediation at the urging of bankruptcy Judge Robert Drain.
The Irving, Texas-based company has stated the liquidation is a result of slowed production caused by striking workers, who belong to the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, that began Nov. 9.
The approximately 325 BCTGM members who work at Hostess’ Biddeford bakery were the second group to go on strike.
Hostess Brands, Inc. employs about 18,500 people.
On Nov. 14, the company threatened to stop production and liquidate if enough strikers didn’t return to work the following day.
When the strike continued past the deadline, Hostess stopped production at its 33 bakeries around the country.
On Friday, it filed a motion with the bankruptcy court, seeking permission to liquidate.
The baker’s union said its members went on strike because of wage and benefit concessions Hostess was imposing on employees, as well as the company stopping payment into a pension plan.
The concessions were needed, said the company, to emerge from bankruptcy. Hostess filed for Chapter 11 bankruptcy in January, for the second time in less than a decade.
Union representatives maintain that the company was failing due to mismanagement and its large debt load.
A story on the Wall Street Journal website said Tuesday that there is already interest in purchasing at least some of the Hostess brands. Flowers Foods Inc., of Thomasville, Ga., whose brands include Nature’s Own bread and Tastykake snack cakes, said Monday it has “re-negotiated lending terms to allow it to tap additional cash,” stated the Journal. “Analysts see that as a clear sign it is gearing up to bid on Hostess assets. And private-equity firm Sun Capital is interested in making an offer for Hostess’ entire business, said a person close to the firm.”
As Hostess and BCTGM attempted mediation Tuesday, in Biddeford, union members met with representatives from the Department of Labor’s Rapid Response Team about their options if they lose their jobs due to the bakery’s closure.
The response team shared information about the resources available.
For employees who belong to the BCTGM union, they wouldn’t be able to get unemployment benefits while the strike was on, said Julie Rabinowitz, a spokeswoman with the Department of Labor. They could most likely receive benefits if the company locks the doors and begins liquidation, she said.
There is also some disagreement between the union and Hostess as to when employees’ health benefits run out.
— Staff Writer Dina Mendros can be contacted at 282-1535, Ext. 324 or dmendros@journaltribune.com.
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