Hostess Brands, the manufacturer of tasty treats, such as Twinkies, Wonderbread, Ding Dongs, Ho hos, Sno Balls, and more has filed for Chapter 11 bankruptcy protection in the Southern District of New York. Old-fashioned union agreements, legacy obligations, and work rules, have been listed as the main culprits responsible for the Texas company’s bankruptcy filing. Unionized workers make up 83% of their 19,000 workers. Some experts expect the unionized workers collective bargaining agreements to be the first to be dismissed in their bankruptcy proceedings. The new health conscious society has also been blamed for Hostess’ decline. Hostess came out of bankruptcy just four years ago, but with the recession, rising health care costs, and skeptical shoppers, the company has been unable to get back on track. The Teamsters, one of the unions representing Hostess employees, has been working with Hostess management for months to establish a plan to address the company’s main issues.
“While no agreement has been reached to date, the Teamsters Union remains committed to working with all stakeholders during the bankruptcy to find a mutually agreeable solution, if possible.” said Dennis Raymond, Director of the Teamsters Bakery and Laundry Conference.
More than 7,500 of the company’s nationwide fleet of delivery drivers and merchandisers are Teamsters. It is said that Hostess was able to emerge from bankruptcy four years ago, due in part to sacrifices made by Teamster members and other unionized employees, including members of the Bakery, Confectionery and Tobacco Workers Union.
“Our members have already given at the well, and this time it will take sacrifices among all parties – management, lenders, equity holders and employees – to restructure Hostess into a viable enterprise that is well-positioned for future growth,” Raymond said. “We were hoping that could have been done prior to a bankruptcy filing, but unfortunately that did not occur. We remain committed to finding a solution, if possible, over the next few months during the bankruptcy process.” Said Teamster Director, Dennis Raymond.
Although Hostess is facing over $1.4 billion in debt, the company was able to secure financing from investors so they can continue producing their baked goods during negotiations and the debt restructuring process. With an agreeable reorganization plan, Hostess hopes to emerge on top.
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