Hostess Fights To Give Execs 'Liquidation' Bonuses

Hostess execs liquidation bonus Twinkies

Hostess Brands Inc., the maker of the iconic Twinkies snack cake, will square off in a bankruptcy court on Monday against an agent of the U.S. Justice Department, who says the wind-down plan is too generous to management.

The U.S. Trustee, an agent of the U.S. Department of Justice who oversees bankruptcy cases, said in court documents it is opposed to the wind-down plan because Hostess plans improper bonuses to company insiders. The 82-year-old Hostess company wants permission to pay senior management a bonus of up to 75 percent of their annual pay so they will stay on and help wind-down the business.

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The U.S. Trustee, Tracy Hope Davis, planned to ask New York Bankruptcy Court Judge Robert Drain at Monday's afternoon hearing to appoint an independent trustee to oversee the sales of the company's assets.

Several unions also objected to the company's plans, saying they made "a mockery" of laws protecting collective bargaining agreements in bankruptcy. The Teamsters, which represents 7,900 Hostess workers, said the company's plan would improperly cut the ability of remaining workers to use sick days and vacation.

"This would all be aimed at increasing the potential recovery of secured lenders," said the court filing by the Teamsters.

The company, which employs 18,500, said on Friday that its operations had been crippled by a bakers strike and winding down operations was the best way to preserve its dwindling cash. Hostess suspended operations at all of its 33 plants across the United States last week as it moved to start selling assets.

Twinkies, Wonder Bread and the company's other well-known brands are likely to be sold to rivals, and the money raised used to repay Hostess Brands' creditors.

Those products, particularly the golden, cream-filled Twinkies cakes, are deeply ingrained in American pop culture and have long been packed in school children's lunch boxes.

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Hostess blamed heavy debt and burdensome wage and pension obligations for its financial woes. It said a strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), which began Nov. 9, was part of a long series of battles between labor and management that contributed to the company's inability to restructure its finances and produce and deliver products at several facilities.

But union officials and line workers said last week that union workers had already agreed to a series of concessions over the years and the company had failed to invest in brand marketing and modernization of plants and trucks, instead focusing on enriching owners such as private equity firm Ripplewood Holdings and hedge funds Silver Point Capital and Monarch Alternative Capital.

Officials at the three firms declined to comment.

On Monday, Flowers Foods Inc, which is seen as a potential suitor for some of Hostess's brands, amended and extended its $500 million loan facility, giving it greater financial flexibility. It did not say whether the change was related to a potential bid for Hostess or any of its brands.

"This amendment to our credit facility positions us to take advantage of an assortment of opportunities as we work to achieve our expansion goals," said Flowers Chief Financial Officer R. Steve Kinsey.

Hostess Chief Executive Gregory Rayburn told Bloomberg TV on Monday that he expects Hostess will find buyers for its brands. Interest has already come from private equity group Metropolous & Co, the owner of Pabst Brewing Co.

"Our family would love to purchase these iconic brands," Daren Metropolous, a principal of the private equity firm, said on Friday. "We are actively pursuing this deal, as no doubt strategics will also."

Fortune reported that private equity firm Sun Capital Partners also wants to buy the company. A spokeswoman for Sun was not immediately available to confirm the report.





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AlanBTrader

Dee,
You and the other proletariat don't get it. Things need to be done to wind down the company and continue operations-in fact , a buyer won't touch a company that doesn't have a transition team.

I know you and others think everyone is equal but they are not . Management is WORTH A LOT MORE than any of the blue collar workers losing their jobs.

By giving these bonuses, the company is more attractive to buyers and maybe some of your blue collar friends will retain their jobs.

Unlikely though-some company will buy the brands, move production to a right to work state and survive.

I know Obama has made executive bashing popular but the reality is this is how business survives. The blue collar workers aren't needed.

November 29 2012 at 3:01 PM Report abuse rate up rate down Reply
Still

A lot of people are out of a job, I don't see how the unionhelped them.

November 21 2012 at 2:20 PM Report abuse rate up rate down Reply
deesd5

the execs deserve nothing! they ran the company into the ground....these shitbags are overpaid anyhow...give bonuses to the labor force...**** the CEO and other execs!!!

November 21 2012 at 1:19 PM Report abuse rate up rate down Reply
Annie

As long as they are not bought out and make things in a foreign country! What would a Twinkie be made of and taste like if it were made in say.....China?

November 21 2012 at 11:31 AM Report abuse rate up rate down Reply
Raymond

Has anyonw from Hostess talked to Bain Capital yet? Heard rumors of a bakery in Beijing that is looking for work.

November 21 2012 at 10:21 AM Report abuse +1 rate up rate down Reply
MICRON TOOL

Corporate greed.......

November 21 2012 at 10:10 AM Report abuse +1 rate up rate down Reply
virginia

Ceo's should get NOTHING! they ran the company down.
another way the 1 percenters screw with the common man.
maybe we need to hang the theives!

November 21 2012 at 9:49 AM Report abuse +3 rate up rate down Reply
dealerswild

Every one blames the union, while the execs, have had their hand in the cookie jar for years.

November 21 2012 at 9:24 AM Report abuse +4 rate up rate down Reply
cmh081756

ok--in the state they filed in there a law called involuntary servitude. the court can force them to work for nothing for up to 90 days. thats why most companies incorporate in ny or delaware. been there done that.

November 21 2012 at 9:07 AM Report abuse rate up rate down Reply
alison

Shouldn't that headline read "Execs Fight to Give Execs Liquidation Bonuses"?

November 21 2012 at 8:54 AM Report abuse +3 rate up rate down Reply

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