Hostess Seeks End to Sparring With Unions Over Sales

Hostess Brands Inc., the bankrupt maker of Twinkies and Wonder Bread, asked a judge to set March 21 as the cutoff date for workers to file back-pay claims and said it has no obligation to bargain with its former unions.

Hostess, previously subject to 372 collective-bargaining agreements, said in court papers filed today in U.S. Bankruptcy Court in White Plains, New York, that it now has “no continuing duty to bargain with” unions objecting to sale procedures. The company said its staff has been reduced to 255 people, including 20 union members.

With a hearing to approve asset bidding procedures scheduled for tomorrow, Hostess is trying to deal with post- bankruptcy claims for unpaid wages, leave, shift differentials and severance requests. Hostess said it was pushed into liquidation when its bakers’ union went on strike Nov. 9 after a judge imposed contract concessions opposed by 92 percent of the union’s members.

Company officials “are amenable to any process that would promote the efficient and fair resolution of claims,” Corinne Ball, a lawyer for Hostess, said in the filing, which includes copies of a claims form workers or their union representatives must submit.

The Hostess creditors’ committee supports the sale of bread assets for a total of about $390 million. The committee objects to a 3.5 percent breakup fee, or $13.65 million, which it said is too much in return for agreements by Flowers Foods Inc. (FLO) to make the opening bids.

Breakup Fee

Company lawyers said the deal-termination fee is “well within the range of breakup fees proposed in similar transactions and is reasonable under the circumstances.”

Flowers is offering to buy 20 bread plants, 38 depots and other assets for $355 million, which may be increased to $360 million if certain license rights are included in the sale. Flowers also agreed to purchase the Beefsteak bread brand for $30 million.

Hostess, based in Irving, Texas, sought court protection in January 2012, listing assets of $982 million and debt of $1.43 billion, after years of declining sales as consumers switched to more healthful foods amid increases in labor and supply costs.

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

To contact the reporters on this story: Phil Milford in Wilmington, Delaware at pmilford@bloomberg.net; Dawn McCarty in Wilmington at dmccarty@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; John Pickering at jpickering@bloomberg.net

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