Hostess asks judge to slash union obligations

[January 27, 2012]  NEW YORK (AP) -- Hostess Brands Inc., the maker of Wonder Bread and Twinkies that filed for bankruptcy reorganization earlier this month, has asked a judge to slash some of its commitments to union employees, saying it's the only way it can emerge as a viable company.

The Teamsters union issued a swift rebuke on Thursday, saying Hostess was trying to "bully" its way out of obligations to its employees.

Hostess, based in Irving, Texas, filed for bankruptcy protection earlier this month, hobbled by discordant forces: Americans' professed preference for healthier snacks, and stiff competition from other sweets makers like Entenmann's. The announcement came just three years after Hostess emerged from a previous bankruptcy restructuring.

In court papers filed this week, Hostess asked the a bankruptcy judge to trim its obligations on commitments like health care and pensions to employees of the Teamsters union and a bakers union. The company said that Hostess brands are losing market share, "fighting for their survival" and "losing hundreds of millions of dollars each year." In all, unions represent more than three-quarters of Hostess' 19,000 employees, the company said.

Hostess said its struggles were largely related to its heavy obligations to union employees and retirees. It also said its competitors don't face the same burden. Hostess said that in its previous bankruptcy reorganization, it "did not obtain any substantial relief" from its union obligations.

Hostess, which filed for bankruptcy protection in the Southern District of New York, says it has a chance of emerging from bankruptcy court as a viable company only if it's relieved of "a number of significant financial commitments and arcane work rules imposed by (the unions') collective bargaining agreements."

The Teamsters union issued a statement saying Hostess was trying to "misuse the bankruptcy process" to "bully" its way to unnecessary changes. It said Hostess employees had already "sacrificed greatly" during both bankruptcy proceedings.

"For Hostess to pin the blame on its employees is unconscionable and demonstrates how out of touch management is with its workforce," said Ken Hall, Teamsters' international vice president.

The Teamsters also added that they are still negotiating with Hostess. The company has a bankruptcy court hearing scheduled for Monday.

[Associated Press]

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