Hostess' Bankruptcy Struggles

: Chris Lee Law Firm

  Filed under: News

Hostess Brands BankruptcyAfter filing for Chapter 11 for the second time in 10 years, Hostess Brands Inc. is having continued problems in their current bankruptcy filing. The snack cake maker is reporting trouble reorganizing their $945 million general and $11.8 pension fund debts. After the blame was placed on union and pension obligations, Hostess is now encouraging the groups to accept their “final offer”.

Cost Cutting Measures

Hostess Brands Inc. has presented a plan to their pension and union groups, which basically would reduce benefits and implement changes to work rules in efforts to lower company costs. The current plan is to withdraw from some multi-employer pension plans and reduce certain retirement and medical benefits, saving the company an estimated $75 million. The company is also considering outsourcing some of the delivery work to a lower costs entity, rather than keeping some of their in-house delivery trucks and employees.

Union officials have yet to comment on the proposal, but have accused Hostess of abusing the bankruptcy process to escape union obligations in the past. Having already threatened to go on strike, many employees were warned that any such efforts would force the company into Chapter 7 liquidation. Despite company executives agree to cut their salaries until the bankruptcy filing is completed successfully, the jury is still out as to whether union groups are going to accept the proposal to move forward.

 

 


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