Hostess aims to clarify pension fund confusion
IRVING, TEXAS — Media reports this week “inaccurately suggested” that Hostess Brands, Inc. inappropriately used pension money to fund its operations prior to filing bankruptcy in January 2012, according to a statement released this afternoon by the Irving-based company.
“As Hostess has repeatedly disclosed, it suspended contributions to its multi-employer pension plans in August 2011 because it faced a severe liquidity crisis and could no longer afford to maintain its pension contributions,” Hostess said. “Over the course of several decades, various labor bargaining units for Hostess Brands’ employees negotiated the right to convert portions of their future wage increases to pension contributions. Once the bargaining units exercised these rights, such future amounts became permanent pension contributions that were separate and distinct from wages.
“At no time were these pension contributions paid as wages, so no funds were ever ‘deducted from paychecks,’ as one news outlet erroneously reported. Hostess Brands has at all times continued to pay its union employees’ current wages in full compliance with its collective bargaining agreements.
“The pension plans may assert and have asserted claims in Hostess’ bankruptcy cases for missed pre-petition and post-petition pension contributions.”
In an interview with the Wall Street Journal, Gregory Rayburn, chief executive officer of Hostess, said it was “terrible” that employee wages earmarked for the pension were steered elsewhere by the company.
“I think it’s like a lot of things in this case,” he told the W.S.J. “It’s not a good situation to have.”
Hostess’ decision to halt pension contributions was a sticking point for many of the union workers who opted to strike.