Union starts strike on company in bankruptcy

[Stark]

That's assuming the company operates as normal until bankrupcty and instantly liquidates everything for the benefit of the creditors. Since the company has been declining for years this doesn't seem likely (and indeed selling their brands seems reasonable to satisfy their debts).

[Sea Skimmer]

The maintenance staff was told to come get your tools today and don't come back, so already nothing is left to do but liquidate. The Bankruptcy judge though got the Bakers union to agree to one single day of negotiations, if that fails, Wednesday the bankruptcy hearings go forward into liquidation. A lot of people suddenly seem to think the Bakers Union thought the company was bluffing the whole time and will agree to the contract now, but I dunno on that one.

[FaxModem1]

Hostess going into mediation between the Union Leadership and the company leadership.

http://www.npr.org/blogs/thetwo-way/201 ... -mediation

Maybe Twinkies Do Last Forever: Union, Hostess Headed To Mediation

by Mark Memmott
November 19, 2012 3:17 PM
The big name in the Hostess lineup. Enlarge image

The big name in the Hostess lineup.
Scott Olson/Getty Images

"Twinkies Saved! Hostess, Bakers Union Agree to Mediation, Avoiding Shutdown."

That's the "alert" this hour at CNBC.com.

Reuters has issued this "bulletin":

"US BANKRUPTCY JUDGE SAYS PARTIES AGREE TO MEDIATION ON TUESDAY IN HOSTESS CASE."

And according to The Associated Press:

"Hostess Brands Inc. and its second largest union will go into mediation to try and resolve their differences, meaning the Irving, Texas-based company won't go out of business just yet. The news came Monday after Hostess moved to liquidate and sell off its assets in bankruptcy court citing a crippling strike last week."

This follows Friday's big news, of course: "No More Twinkies? Hostess Brands Is Shutting Down."

We'll watch for more developments.

So, depending on the mediator, and how the parties act, Hostess could still be saved.

[TheHammer]

The idea that twinkies or hostess as a brand was going to "disappear" was ridiculous from the start. Those brand names have value. So when I see it "saved" I just sort of have to laugh because it was never in danger of going away. Reorganized? Sure, but those names have value and certainly weren't going to be gone forever.

[Flagg]

The idea that twinkies or hostess as a brand was going to "disappear" was ridiculous from the start. Those brand names have value. So when I see it "saved" I just sort of have to laugh because it was never in danger of going away. Reorganized? Sure, but those names have value and certainly weren't going to be gone forever.

The only danger is to the 18,500 employees.

[Teebs]

Floating charges crystallize upon default so the first two classes of lien holders would merge.

I'm hardly an expert on insolvency, but fixed charges take priority over floating charges because they're over specific assets. The normal process is to take both. Might be different in the US of course.

That's assuming the company operates as normal until bankrupcty and instantly liquidates everything for the benefit of the creditors. Since the company has been declining for years this doesn't seem likely (and indeed selling their brands seems reasonable to satisfy their debts).

Assuming US bankruptcy law is similar to that of the UK, I suspect liquidating assets when you know you're insolvent for the benefit of shareholders would be a criminal offence.

[Stark]

Right, which is why the idea that a company on the downslide just sits there operating normally until someone hits the insolvency switch is pretty retarded. Surely by the time bankrupcty occurs management would have made several attempts to restructure, recapitalise and raise money? You're not suggesting they are literally worthless, are you?

Its just not as simple as 'once bankrupt creditors get assets, thus management never profit'. Frankly, that's an alarmingly naive position.

[Aaron MkII]

The idea that twinkies or hostess as a brand was going to "disappear" was ridiculous from the start. Those brand names have value. So when I see it "saved" I just sort of have to laugh because it was never in danger of going away. Reorganized? Sure, but those names have value and certainly weren't going to be gone forever.

The only danger is to the 18,500 employees.

There's that.

Even if twinkie as a brand name disappeared, there are non Hostess snack cakes. Should people want one they'll buy a Fancy Lads Snack Cake or some other.

[Teebs]

Right, which is why the idea that a company on the downslide just sits there operating normally until someone hits the insolvency switch is pretty retarded. Surely by the time bankrupcty occurs management would have made several attempts to restructure, recapitalise and raise money? You're not suggesting they are literally worthless, are you?

Its just not as simple as 'once bankrupt creditors get assets, thus management never profit'. Frankly, that's an alarmingly naive position.

That's confusing management with owners. Management can happily profit away. Sometimes they're the same people sure, but not necessarily. There are restrictions on how shareholders can take money out of a company.

[Flagg]

According to Ed Schultz on MSNBC the mediation has failed. Huge shock.

[Broomstick]

Right, which is why the idea that a company on the downslide just sits there operating normally until someone hits the insolvency switch is pretty retarded. Surely by the time bankrupcty occurs management would have made several attempts to restructure, recapitalise and raise money?

Roughly speaking, in the US there is restructuring, bankrupty+reorganization/restructuring (chapters 11 and 13 of the bankruptcy code), and bankruptcy/liquidation (chapter 7). So in the US the steps you mention prior to liquidation are actually considered forms of bankruptcy and are covered by the bankruptcy code.

Hostess had already undergone chapter 11. It's now undergoing the liquidation variation of bankruptcy, chapter 7.

[Broomstick]

Even if twinkie as a brand name disappeared, there are non Hostess snack cakes. Should people want one they'll buy a Fancy Lads Snack Cake or some other.

"Little Debbie" is probably the second-biggest brand name around here, and many of their "snack cakes" are the same as hostess, but with a different name attached. For example, Little Debbie Swiss Cake Rolls are indistinguishable from Hostess Ho-Ho's.

[Lord Zentei]

According to Ed Schultz on MSNBC the mediation has failed. Huge shock.

Quite a shame.

There are times when one should not be gung-ho about one's social idealism. This was one of those times. And regarding the claims I see in this thread about Hostess CEOs being incompetent/evil/greedy/the-ones-to-blame -- regardless of whether that's the case, this action by the baker's union certainly didn't help things.

[Sea Skimmer]

Great fact from someone now unemployed by this, considering the union was complaining about 'inferior' healthcare being part of the deal offered. The monthly premium via cobra to maintain that health plan they had, for a single young adult male, is 1284.87 dollars a month! Bakers union employees had been paying 240 dollars a month. So the company was paying about 10 grand a year in health benefits per worker.... except what's more, if you had a family on this plan, you still paid 240 dollars a month. Flat rate for all union members regardless of family size. Also very low copays, 25 dollars or nothing, for everything.

The deal offered by the company would have changed this deal so that you paid based on number of people covered, which actually would have meant some people were paying under 100 dollars a month. Yeah the plan wouldn't have been as good, but adequate instead of gold plated. What an evil corporate plot.

[aieeegrunt]

Yup the workers who actually create the wealth as opposed to simply manipulating/parasiting it should totally grab both ankles while the management twits already being grossly overpaid to put the company in a hole should get raises.

Because just meekly taking it is a sure fire way to make sure they don't do it again.

[Starglider]

Yup the workers who actually create the wealth as opposed to simply manipulating/parasiting it should totally grab both ankles while the management twits already being grossly overpaid to put the company in a hole should get raises.

Based on the capital requirements of the 2009 LBO, the employees could easily have bought out the entire company for an average investment of under $10,000 each, and turned it into a super happy communist collective with equal ownership and profit sharing for all. But no, easier to bitch and whine while destroying the company with impossibly high benefit claims and ridiculously restrictive working practices.

[JLTucker]

Yup the workers who actually create the wealth as opposed to simply manipulating/parasiting it should totally grab both ankles while the management twits already being grossly overpaid to put the company in a hole should get raises.

Based on the capital requirements of the 2009 LBO, the employees could easily have bought out the entire company for an average investment of under $10,000 each, and turned it into a super happy communist collective with equal ownership and profit sharing for all. But no, easier to bitch and whine while destroying the company with impossibly high benefit claims and ridiculously restrictive working practices.

Who cares? A company who contributed to the obesity rates in America is out of business. The positives are overwhelmingly sweet.

[Enigma]

Right, until another company or several buys out the entire line and the status quo remains.

[Aaron MkII]

Yup the workers who actually create the wealth as opposed to simply manipulating/parasiting it should totally grab both ankles while the management twits already being grossly overpaid to put the company in a hole should get raises.

Based on the capital requirements of the 2009 LBO, the employees could easily have bought out the entire company for an average investment of under $10,000 each, and turned it into a super happy communist collective with equal ownership and profit sharing for all. But no, easier to bitch and whine while destroying the company with impossibly high benefit claims and ridiculously restrictive working practices.

Who cares? A company who contributed to the obesity rates in America is out of business. The positives are overwhelmingly sweet.

Yeah wonderful. Now all those employees have to try to find work in a ruined economy. Totally sweet.

[SirNitram]

Based on the capital requirements of the 2009 LBO, the employees could easily have bought out the entire company for an average investment of under $10,000 each, and turned it into a super happy communist collective with equal ownership and profit sharing for all. But no, easier to bitch and whine while destroying the company with impossibly high benefit claims and ridiculously restrictive working practices.

Who cares? A company who contributed to the obesity rates in America is out of business. The positives are overwhelmingly sweet.

Yeah wonderful. Now all those employees have to try to find work in a ruined economy. Totally sweet.

What does that matter? The JOB CREATORS on the hedge fund who bought it up walk away with sacks of cash anyway. Employees are expendable. To say otherwise is to be an evil socialist.

[Sea Skimmer]

Actually if hedge funds and private equity didn't give this company a couple hundred million dollars during its first bankruptcy years ago it, would have liquidated then and even even larger cuts to wages and benefits might not have been enough to save it. In fact all those big evil businesses did was let the company and the union dodge the reality of the unsustainable business for a few years. People copy pasting text from the union website doesn't change that. Its telling that the Bakers Union has never once put up its own proposal for how to make the company solvent, and indeed did not negotiate since August except for one single day. Meanwhile the Teamsters, who had more freaking union workers too, studied it, couldn't come up with a better proposal and accepted the deal.

Bitching about CEO pay changes nothing when its a few million dollars against a billion dollar problem. It a delusion to dodge the real scale of the problem.

[Aaron MkII]

What does that matter? The JOB CREATORS on the hedge fund who bought it up walk away with sacks of cash anyway. Employees are expendable. To say otherwise is to be an evil socialist.

Well, I am a socialist. Though I think Harvey Birdman's "the workers should have bought the company" wins the thread. Cause guys employed making cakes have 10,000$ laying about.

[Simon_Jester]

It would be an interesting alternative, though getting enough loans to do it would be a real bear.

The idea of making the company employee-owned is a common suggestion in cases like this; it's popular among some circles on the left. The problem is that as we see, even when the company's cash value is quite low, it's hard for the employees to pull together the money to do it legally. And they still end up 'inheriting' all the company's debts, including the pension plan.

[Aaron MkII]

Yup.

I certainly don't have issues with employees owning the company but there's absolutely no point if their going to inherit the debt. Maybe if the debt could be forgiven. *shrug*

[K. A. Pital]

It would be an interesting alternative, though getting enough loans to do it would be a real bear.

The idea of making the company employee-owned is a common suggestion in cases like this; it's popular among some circles on the left. The problem is that as we see, even when the company's cash value is quite low, it's hard for the employees to pull together the money to do it legally. And they still end up 'inheriting' all the company's debts, including the pension plan.

If the government is openly hostile to worker takeovers, no situation will be ever good enough. Even if the bankrupt company has no funds that are of interest to the creditors and the debt has been written off as hopeless on the creditor side, and even some sort of an agreement could be negotiated between the workers and the creditors (as was the case in several instances in Argentina), with or without state assistance.

Based on the capital requirements of the 2009 LBO, the employees could easily have bought out the entire company for an average investment of under $10,000 each, and turned it into a super happy communist collective with equal ownership and profit sharing for all.

Indeed they should have.