Monday, November 19, 2012

As Hostess tries to get executive bonuses paid during liquidation hearing, judge asks for mediation

The Twinkie may be saved. U.S. bankruptcy judge Robert Drain has stepped in, preventing the the liquidation of Hostess Brands -- for the moment --, as a suggested mediation process between the company and its Bakers Union has been accepted by both sides.

If mediation works, a food item -- or really, a set of food items, including Wonder Bread, Twinkies, Ho Hos, Ding Dongs, and more -- that is a piece of pop culture will remain alive.

While Hostess has claimed intransigence on the part of the union, progressive analysts and others have looked at the situation from a different angle. The fact that Hostess went to drain asking to pay bonuses to the company's top executives, in the company, even as they attempt to liquidate the company's assets in a manner that would eliminate the positions of at least 18,500 workers.

It's OK, though, to kill off the jobs of the 18,500 one-percenters. We quote:
Hostess Brands will ask a bankruptcy judge on Monday for approval to shut down the company and pay $1.75 million in executive bonuses.

Unions representing workers at the maker of Twinkies, Wonder Bread and Drake’s snacks are arguing against the bonuses. [...]

Under the plan, bonuses ranging from $7,400 to $130,500 will be paid to 19 executives. The company argues the bonuses are below market rates for such payments.
Considering the end result of the liquidation is bankruptcy for the company, any such outlay of funds would mean the creditors have less to work with. The U.S. Trustee, which is a member of the Justice Department that advocates for creditors in bankruptcy cases, argued in court on Monday that Hostess has "not demonstrated that the insider bonuses are permissible.”

Hostess CEO Greg Rayburn said the company needs final word by Tuesday. The Monday hearing on the liquidation motion was rescheduled for Wednesday at 11 a.m.

Even if mediation fails -- and there's no guarantee it will succeed -- there are companies interested in picking up the Hostess pieces while they still fall under the 30-second rule. Both Pabst Brewing Company and the parent company of Tastykakes have already expressed interest at least part of Hostess' assets.

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