- The Washington Times - Monday, November 19, 2012

The maker of Twinkies, Ding Dongs, Ho Hos and Wonder Bread agreed Monday to last-minute mediation talks in the labor dispute that has driven the company to the brink of shutting its doors.

Hostess, the troubled Irving, Texas-based snack maker, which filed a motion to begin liquidating assets on Thursday, will sit down Tuesday for one day of talks with union leaders and the bankruptcy judge overseeing the case.

The company has been crippled by a strike that began Nov. 9 by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents about 30 percent of Hostess workers.

With an estimated 18,000 jobs hanging in the balance, U.S. Bankruptcy Court Judge Robert Drain postponed the liquidation hearing until Wednesday in hopes the company and the unions could reach an agreement.

“My desire to do this is prompted primarily by … my belief that there is a possibility to resolve this matter notwithstanding the losses that the debtors have incurred over the last week or so and the difficulty of reorganizing this company in the first place,” said Judge Drain, who is presiding over the case in White Plains, N.Y.

If the bankruptcy proceeds, it will be company’s third in less than a decade.

Hostess has about 18,500 employees, 33 bakeries, 565 distribution centers, and 570 bakery outlet stores, according to the company’s website.

Judge Drain scheduled the mediation that he will lead for Tuesday. In addition to Hostess and the striking union, the company’s largest union, the International Brotherhood of Teamsters, and its lenders could also participate.

“The parties are going to give it their best shot,” the judge said.

Teamsters General Secretary-Treasurer Ken Hall on Monday called the mediation a positive step forward. “The Teamsters will closely monitor the mediation between the BCTGM and Hostess management and assist in any way we can to help the two sides reach an agreement that keeps the company’s doors open,” Mr. Hall said in a statement.

Even if Hostess and the bakers union can come to an agreement, the company still faces challenges.

“At this point, your honor, our customers know we’re going out of business,” Hostess attorney Heather Lennox said in court. “It would be very hard for us to recover from this damage, your honor, even if there were to be an agreement in the near term.”

In January, Hostess filed for its third bankruptcy, claiming it couldn’t compete in the face of unbearable pension and medical benefit obligations and the economic downturn. At the time of the filing, the company had tens of thousands of creditors, including the Bakery & Confectionery Union & Industry International Pension Fund, and estimated it owed more than $1 billion, but only had assets of between $500 million and $1 billion.

It sells about $2 billion of its products annually.

“The company’s cost structure left it poorly positioned to respond to a worsening economy, increased competition and consolidation in the industry that has given other bakery companies major economies of scale and workforce advantages,” Hostess said at the time.

There was also news Monday that investment firm Sun Capital was interested in acquiring the troubled snack maker. According to Fortune magazine, Sun Capital reached out to Hostess after last week’s bankruptcy filing.

“I think that we could offer a slightly better, more labor-friendly deal than what was on the table last week,” Sun co-CEO Marc Leder told Fortune.

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