Hostess Brands In Hot Water Over Twinkies (and Jobs of 18,000 Workers)

Hostess Brands In Hot Water Over Twinkies (and Jobs of 18,000 Workers)

Hostess Brands heads to bankruptcy court to explain to a judge why it wants to pay its key managers bonuses while the company prepares to close its doors for good. Hostess is the maker of Wonder bread, Twinkies, and other baked goods. Most of the company’s more than 18,000 workers will be unemployed during the liquidation process.

Hostess Brands In Hot Water Over Twinkies (and Jobs of 18,000 Workers)

Just days ago the manufacturer suspended operations at its plants and bakeries all over the U.S. The company’s well-known brand names will likely be sold to rival companies, and the cash will be used to pay back the company’s creditors.

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Union workers at Hostess Brands are battling executives over the shut down plan and the bonuses it would pay to key managers. The plan calls for 19 executives to receive bonuses between $7,400 and $130,500 so that they can stay on with the company during the shutdown. Company executives say the bonuses are less than current market rates for these types of payments. However, union leaders say the company’s bankruptcy is due to mismanagement, so they should not receive bonuses for the company’s shutdown. They also say that the plan would make it impossible for the workers left during the wind-down to use any of their vacation or sick days.

Hostess Brands executives say the company’s pension and wage obligations and its debt problems are to blame for the company’s demise. They also say that a recent union strike was just one of many battles between management and labor, which added to the manufacturer’s inability to restructure.

Judge Robert Drain has recommended that Hostess Brands and its unions go into mediation over the dispute. He is attempting to broker a new contract between the company and its unions. If today’s mediation session fails, then tomorrow Hostess will be back in court to attempt to move forward with plans to shut the company down.

Meanwhile potential buyers are circling Hostess Brands as they wait for the standoff between management and the unions to play itself out. Sources say some potential buyers include Flower Foods, the maker of Nature’s Own Bread and ButterKrust Bread, and Sun Capital, a private equity firm that is reportedly considering making a bid on the entire business.

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