Hostess prevails in effort to impose cost-cuts
WHITE PLAINS, N.Y. -- Judge Robert Drain has approved a Hostess Brands Inc. petition to impose a cost cutting collective bargaining agreement on a resistant bakery union, Reuters is reporting.
The decision came at a hearing Oct. 3 in the U.S. Bankruptcy Court Southern District of New York. Hostess Brands had asked for the court action Sept. 20 after the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union rejected the company proposal with 92% of the union members voting not to accept the labor contract. The “no” vote came after Hostess’ other large union, the International Brotherhood of Teamsters, narrowly approved the contract modifications.
Greg Rayburn, chief executive of Hostess, told the court that imposing the agreement, which includes an 8% wage cut, was the only way for Hostess to survive as a going concern and avoid prompt liquidation of assets.
Hostess filed for Chapter 11 bankruptcy protection Jan. 11. At the time, Hostess listed the B.C.T.G.M. as its largest unsecured creditor with debts totaling $944.2 million. It was the second bankruptcy filing for Hostess, following several years under creditor protection beginning in 2004.
As of early Oct. 4, neither Hostess Brands nor the B.C.T.G.M. had issued reactions to the judge’s ruling.