Monday, November 19, 2012

Hostess Liquidation Gives Union "Last Chance"

Obama Economy Killing Hostess Twinkies

Per The Wall Street Journal via Business Insider:

Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., asked attorneys representing Hostess and the Bakery, Confectionery, Tobacco Workers and Grain Millers International union whether mediation could help
"Moving to a liquidation is also a significant economic hit, and I think that many people, myself included, have serious questions as to the logic behind the decision to strike and a concern that it may be as a result of differences as far as information and goals," he said.
"I'm giving the union, as well as the debtors and their lenders, the last chance."

“To me not to have gone through that step leaves a huge question mark over this case, which I think–I may be wrong–but I think will only be answered in litigation. And that’s no one’s desired outcome,” the judge said.
ABC News explains why the baker's union may not budge:
After Hostess’s unions had agreed to more than $100 million in annual cost concessions during Hostess’s previous bankruptcy, the bakery union thought it made little sense to agree to further cuts. It feared a deal would pull down wages and benefits throughout the industry, without saving Hostess.

“Our consultant said the debt load on the company was too heavy, and that we would be back in bankruptcy and facing liquidation in 12 to 16 months from now, even if we took more concessions,” David B. Durkee, the union’s secretary-treasurer, said.


“There was this whole theory that the company was bluffing about liquidation and there was some white knight that was going to come and buy the company” Mr. Hall [of the Teamsters] said.

Now, Hostess and the bakery union will meet at the offices of the company’s lawyers. Representatives for the Teamsters and the company’s bankruptcy lenders were also invited to attend. If the two sides cannot agree, Hostess’s lawyers are expected to appear in court on Wednesday morning to seek approval of their liquidation plan.
As we heard during the presidential election, Barack Obama saved General Motors by keeping them out of judicial bankruptcy in favor of a political bankruptcy that stole money from creditors and bond holders in favor of the unions. As fellow SLOBs author Left Coast Rebel puts it,
'When will the federal government and the Obama Administration propose a bailout for Hostess and their 18,000 union workers?
If it was the "failed policies of the past" that got GM into "this mess," it must be the "failed policies of the present" that has Hostess facing liquidation. Fair is fair.

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