Judge Ordered Mediation Between Hostess and Union Fails

Following the announcement that Hostess, the beloved maker of Twinkies and Wonder Bread, was closing its doors after failed talks with union members, a federal bankruptcy judge had ordered the two parties to continue mediation to seek out alternative solutions to their dispute.  After another round of mediation, however, Hostess announced Tuesday night that the efforts had failed, according to the New York Times.

U.S. Bankruptcy Judge Robert Drain had said that Hostess and the baker’s union did not spend enough time discussing a new contract agreement, the failure of which led to a nationwide strike and Hostess’s decision to liquidate.

“To me, not to have gone through that step leaves a huge question mark over this case which I think will only be answered in litigation,” Judge Drain said, according to Bloomberg. “My desire to do this is prompted primarily by the potential loss of over 18,000 jobs, as well as my belief that there is a possibility to resolve this matter, notwithstanding the losses the debtors have incurred over the last week or so.”

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union had not engaged in negotiations with Hostess since late summer, and if talks were unsuccessful in the next few days, the court felt that the company would continue its liquidation. The company had already suspended all orders that were in transit and layoff notices are expected to go out immediately. Hostess said it plans to retain roughly 3,500 employees over the next couple of months to wind down operations.

The parties were to appear before the bankruptcy court on Wednesday November 21st at 11 am in order to report on the status of their issues.

Hostess filed for protection under bankruptcy law in January after years of declining sales and an inability to come to an agreement with union workers. The company offered union workers a new contract, which would have lowered the $100 million in pension contributions Hostess was previously making to $25 million. In addition, the new contract included wage cuts and a 17 percent reduction in health costs. The baker’s union rejected the offer and began a strike in November.

Joel Glucksman is an experienced civil and bankruptcy litigator specializing in the representation of secured lenders and other creditors in complex suits and bankruptcies. His court appearances take him throughout the State and Federal courts in the metropolitan area, focusing in particular on the Bankruptcy Courts for the District of New Jersey and the Southern and Eastern Districts of New York. For more information, please visit Joel Glucksman's full biography at Scarinci Hollenbeck

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