Phoenix Bankruptcy Law News

Hostess Threatens Liquidation After Workers Strike

Hostess Brands has been locked into a tug of war battle with its workers' labor unions ever since the company filed for bankruptcy earlier this year. In August, Hostess gave its workers an ultimatum: accept wage and benefits cuts, or find another job.

The Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, the company's second largest union, overwhelmingly rejected the deal. Now the union is taking its opposition one step further by striking, The Dallas Morning News reports. Hostess warns that the strike could be the last nail in the company's cream-filled coffin.

Under the proposed deal, 8-percent wage cuts would be implemented across the entire company. On top of that, employee health plans would be cut by 17 percent, and Hostess would stop contributing to multi-employer pension plans until 2015.

The BCTGM wasn't having it. The deal was rejected by about 92 percent of the union's Hostess workers, reports the Morning News. "Hostess is making a mockery of the labor relations system that has been in place for nearly 100 years," the union's president Frank Hurt said.

On Friday, the union's Hostess workers went on strike. "Our members are not just striking for themselves, but for all unionized workers across North America who are covered by collective bargaining agreements," Hurt said.

Hostess says the baker's strike may be the company's death knell. In filing for Chapter 11 bankruptcy, Hostess hoped to shed debt by renegotiating its contracts and selling some of its lines. Now, however, the company may have to go into liquidation mode.

Hostess says that if the strike continues, the company will focus on selling its assets to the highest bidder. Reports say that would likely mean massive layoffs for the company's 18,300 workers.

Stay tuned to see who rises to the top.

Related Resources: