- September 28, 2012
- Posted by: Richard Feinberg
- Category: News
Hostess Brands Inc. has had quite a few ups and downs since filing for bankruptcy earlier this year. Blaming union obligations for their ever increasing debt load, company executives have faced tough decisions as to how debt restructuring should take place. After presenting their final contract offer to union members last month, voters rejected the proposal sending company officials back to the drawing board.
The proposal presented last month included an 8 percent reduction in commission for employees and lowered initial wages. Structured to increase by 3 percent each year over contract duration, employee union members were clearly not happy with this half-hearted effort. Although one of one of two company unions did accept the bid, the agreement was for both to be on board.
Since the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union rejected the offer, rumors began surfacing of an immediate liquidation; an idea originally set forth by company CEO Gregory Rayburn. However, Rayburn has since revamped his statement and has indicated that the company will, instead, seek the help of the bankruptcy court to insist the remaining union accept the offer.
As the unions await the next move, Rayburn said he is hoping for a court hearing in early October.