Hostess Fail to Reach Union Deal in Mediation

Hostess Brands Inc. failed to reach a deal with union representatives during a mediation session aimed at preventing the Twinkie maker from liquidating and eliminating more than 18,000 jobs.

“A mediation today with the Bakery, Confectionary, Tobacco and Grain Millers Union was unsuccessful,” Hostess said in a statement. The company said it won’t have further comment until a court hearing set for tomorrow.

U.S. Bankruptcy Judge Robert Drain in White Plains, New York, yesterday adjourned a hearing where Hostess planned to seek permission to shut down, and sent the parties off for a last-ditch effort to negotiate terms that might keep the floundering company afloat.

“I’m giving the union as well as the debtors and their lenders a last chance to try and work those issues out in private,” Drain said at yesterday’s hearing. He cited “serious questions as to the logic behind the decision” by the bakers’ union to go on strike earlier this month.

Corrina Christensen, a spokeswoman for the bakers union, didn’t immediately return a call seeking comment on the failed mediation after regular business hours.

Confidential Mediation

Hostess and the union agreed to Drain’s request to enter confidential mediation under his supervision. They met today at the law offices of Jones Day in New York. Drain postponed until tomorrow the hearing on Hostess’s request to shut down and move toward liquidation.

“Unfortunately, the last-minute mediation efforts by Judge Drain were not successful,” Ken Hall, general secretary- treasurer of the Teamsters union that represents Hostess drivers, said in a statement. “This is a tragic outcome.”

Hostess said it was forced to opt for liquidation after the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9. The union, representing about 5,000 Hostess workers, walked out after Drain imposed contract concessions opposed by 92 percent of the union’s members. Teamsters members accepted the proposed cuts.

Hostess, based in Irving, Texas, sought court protection in January, its second time in bankruptcy, listing assets of $982 million and debt of $1.43 billion. The 82-year-old maker of Hostess CupCakes, Ding Dongs and Ho Hos has endured years of declining sales as Americans turned to rivals’ snacks and breads, while ingredient costs and labor expenses climbed.

The case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains).

To contact the reporter on this story: Dawn McCarty in Wilmington at dmccarty@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.