Hostess Mediation Fails, Liquidation To Proceed; Furious Laid Off Workers Now Turn On Labor Union

Tyler Durden's picture

Last week, when discussing the next steps for the company, and specifically the hope that mediation may resolve the epic animosity between management and workers, we stated that "What makes a mediation improbable is that the antagonism between the feuding sides has certainly hit a level of no return: "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." Sure enough, moments ago we learned that mediation has now failed and the liquidation may proceed. And since in America nobody understands that proper sequence of events involved in a bankruptcy liquidation, where the valuable parts always end up being acquired by someone, in this case the Twinkie brand and recipe, let the pointless Ebay bidding wars over twinkies continue. As for what really happens next, if indeed Bimbo is prohibited from acquiring the assets in the Stalking Horse auction due to anti-trust limitations, then the buyer will almost certainly be a "financial", i.e., another PE firm, whose coming means the end of any hopes and dreams of preserving union status at fresh start Hostess, or whatever the new firm will be named.

From the WSJ:

Hostess Brands Inc. said Tuesday night it would proceed with liquidation plans after mediation fails.

Earlier Tuesday, the head of the bakers union whose strike precipitated Hostess liquidation plans didn't attend a last-ditch mediation session and wasn't hopeful about its prospects, he said.

"I'm not too optimistic about this mediation," Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, said when reached earlier Tuesday afternoon in Columbus, Ohio. He said he couldn't get to New York, where the session was taking place; instead, he said, the union's secretary-treasurer was attending.


The mediation came at a judge's suggestion after the Twinkie maker said Friday that a week-long strike by the bakers left the company no choice but to seek a bankruptcy judge's approval for liquidation.


The judge, Robert Drain, urged mediation, citing among other things the hope for saving some 18,500 jobs. The company filed for bankruptcy protection for the second time in January.


The judge indicated Monday that if mediation wasn't successful, Hostess could return to court Wednesday to pursue its liquidation plan.


Doug Mansky, a Hostess driver in Detroit and a member of the International Brotherhood of Teamsters, was in the process of moving to a cheaper condominium on Tuesday, after his union had agreed to an 8% pay cut that he said would shave $200 a week from his income. After Judge Drain cleared Hostess to impose the same new labor terms on the bakers union, they went on strike.


"I hope things work out. I'm going to be 49 and trying to find a job in a market that's terrible," Mr. Mansky said.

Sadly, the reality of learning just how bad the labor market truly is, all smoke and mirrors of a recovery aside, will now have to be experienced by not only Mr. Manksy but 18,499 of his fellow co-workers, who may have been duped into hoping by their union that by holding out a hardline stance, they would gain something.

They have now lost everything. And not too unexpectedly, the workers are now turning on the Union!

[S]ome Hostess workers in another union awaiting the
mediation results criticized Mr. Hurt, the 20-year president of the
bakers union, who defended his decisions and actions during the
company's bankruptcy process.


Scott Quenneville, a Hostess truck driver represented by the Teamsters, said he feels his colleagues were misled by Mr. Hurt into believing that a buyer would swoop in for the company. Mr. Hurt on Sunday said he thought there was a good chance a buyer would emerge who would give union members their jobs back.


"Frank misled a lot of people. He was not going to settle for anything less than closing the company down, because they didn't want that 8% pay cut," said Mr. Quenneville. "If you don't want the job, leave the job. Why ruin 18,000 jobs?"


"I didn't mislead anybody on anything," Mr. Hurt said. He said he didn't tell workers preparing to strike that a buyer for Hostess was definitely waiting in the wings.


Mr. Hurt said, "I don't want anybody to think that anybody is guaranteeing anyone anything, but we did know that there were people taking a look at this company."

This would be a truly fantastic drama, if people's lives were not at stake. And no, not one former Hostess worker will retain their job at the new company: that much is certain.

As we said, if only people had a basic understanding of how bankruptcy truly worked, and what the real state of the economy was, then Hostess' workers may have had a chance and some amicable comrpomise would have been possible.

Then again, if people in America actually understood economics and simple finance, then the "Ohio outcome", and many others, would have likely been quite different.

Now we can only hope we were not correct about the ultimate outcome too: namely that the US government will effectively hijack the bankruptcy process, and in doing so "bailout" a junk food maker, just so 18k votes can be preserved at the expense of creditors and making yet another mockery of the bankruptcy process, and property rights in the US.

Then again, this is precisely what the Union was likely hoping for all along, because once the government starts bailing everyone out, just where does it draw the line?

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LetThemEatRand's picture

Decisions, like including paying themselves millions (not so much a mistake to them, I suppose).  The unions broke their back because their business model of funneling everything to the top presupposed that workers would receive far less.

The problem is that management legally has no skin in the game, especially at the major corporation level.  These guys are part of a club that will see them captaining another Valdez to failure in no time.  

dark pools of soros's picture

the problem is that once managers steal hundreds of thousands they can lose their jobs and wait around till the next company to latch in and pillage.  And any billionaire can toy with a whole town let alone one company

centerline's picture

Exactly.  Follow the money.  There is no real recourse anymore.  Loading these things up, yanking the cash out in advance, and crashing them on the beach is the game.  Top executives are just the frontmen for the operations.

Edit:  Got to reconnect the consequences.  Unfortunately, when this gets out of control, the restart of consequences is usually pretty ugly.

knukles's picture

Not to forget that being a union boss is likewise a racket, superlative salaries, bennies, perks, expense accounts, nepotism, kickbacks, etc., all at the expense Once Again of the Working Slob, the same guy paying the taxes, raped by the politicians, kids sent to shit schools, trying vainly to remember what the fuck that American Dream was Supposed to Have Been....

LetThemEatRand's picture

Yes, there is corruption there too.  And no doubt that corruption is part of the problem.  I advocate for addressing the whole problem, which includes the corporate structure at its core.  In my view, if CEOs did not have the protection of the corporate system, there would be little need for large unions in their current form (what's left of them).

centerline's picture

You are drawing some -1 hits tonight for some basic truths and fairly level judgement LTER.  I would evidence this as another sign that we are fucked.  lol.

johnberesfordtiptonjr's picture


The imputed 6-figure salary for drivers sounds off.   The real number is probably in the $50K-$60K range…,11.htm

Sure, a few route sales people COULD make a lot more by putting in extraordinary hours, etc. But, my guess is that this is very atypical. 

It appears that Hostess management is largely to blame since they did not seem to care about new product development, marketing, re-branding, etc. They did not find it necessary to jump on to the low sugar/low-fat bandwagon, etc. They made every mistake in the book and still (as usual) managed to rip off the company in the end.


Zgangsta's picture

He was driving a truck in Detroit.  That's gotta be worth some extra hazard pay...

Urban Redneck's picture

Yeah, you know better than the Hostess employee how much he was being paid, and of course, you know where the fault lies...

You obviously know nothing about the nature of organized labor.

Hostess was not a profitable and growing entity making NEW HIRES.

The primary economic distortion created by the organized labor model in the US is the sacrifice of economic value added by employment to the seniority of the employee.  The more expensive labor is the first guy in who is also the last guy out.  The guys making 50-60K were sacrificed a long time ago if they have been in bankruptcy a few years and are going into liquidation now.   


nmewn's picture

This is their second bankruptcy LTER. This last one started when they filed Chapter 11 back in January.

They had eleven months to seek a new gig in the Obama economy they desired...maybe a Fisker Karma just caught up and ran over them.

LetThemEatRand's picture

Which has exactly nothing to do with the substance or point made in my post.  I don't believe it is Bush's fault, Obama's fault, or any other modern politician's fault.  Perhaps you think Obama is somehow at fault.  I don't see how, but I suppose I'm not surprised that you would see the connection.  And what does Fisker have to do with Twinkies?  You have more talking points than Fox News (and many of the same I would add).

Edit:  This is actually their third filing in the last five years.

ACP's picture

He probably doesn't mean Obama is directly at fault, but the fact is the free for all we've seen in govt, on Wall St, and with unions, is tied to the fact that Obama is demonizing a certain segment of the population in order to "divide and conquer" the masses. Yes, I said it. I don't remember which politician said it, but he was absolutely correct.

LetThemEatRand's picture

Their first bankruptcy filing was in February of 2009.   And the last time I checked, the "masses" are middle and lower class.   I agree the Red Team and Blue Team are dividing them.  I see absolutely no indication that one team is trying to be be a "uniter."  I've abandoned both teams for that reason.

nmewn's picture

"Their first bankruptcy filing was in February of 2009."

I stand corrected...its Michelle's fault, not O'Barry'

LetThemEatRand's picture

O took office on January 20, 2009.   You don't really claim that he destroyed Hostess Brands in a couple of weeks, do you?  Then again, I suppose you probably do.

knukles's picture

Oh Jesus H Christ, man, now she's gonna be applying for supplemental Loss of Twinkies Benefits to maintain the Big Ass Lifestyle even though the Official Cook probably makes all she wants from scratch with her own garden fresh ingredients* maintained by the Parks Service, et al...

Whatta fucking mess....


* Ya'll just gotta see those State and County Fair Blue Ribbon Prize Winning Marshmallow Trees she grows out there on the far Back 40 of the South Lawn which been exempted from Agenda 21.

Booyah Motherfuckers!

nmewn's picture

lol...I don't think anyone believes Michelle tends that garden by herself.

In other words, she didn't grow that, someone else did ;-)

ACP's picture

The Dems discovered that dividing the country from within consolidates power much faster than the outdated Rep method, which demonizes an entity far away, that no one can see or touch, thereby dehumanizing them. It worked during the Cold War because as far as Americans were concerned back then, we could have just as well been fighting space aliens. This is no longer as effective because the Internet can more quickly put people in the enemies shoes and viewpoint, but can also be used for propaganda if people don't know how to validate and separate fact from fiction.

LetThemEatRand's picture

I agree.  So the Blue Team is temporarily on top (just barely).  The Red Team will adjust when the system collapses.  We'll probably have another Bush running for President in 2016, and he will probably win.

centerline's picture

Turd versus douchebag.  Who doesn't get it yet?   

willwork4food's picture

During the height of the Reagan cold war (mid 80's), we all were propogandanized with the filth of the USSR. Seriously, I literally imagined Russian girls to be ugly, fat with massive hairy bodies. Yukkie.

How wrong I was...

Disenchanted's picture



A decade and a half before that it was 'gooks' slant-eyes, and 'charlie' that was the problem...before that that Krauts and Nips. Today it's them A-rab turrists. Who's gonna be tomorrow's Goldstein?

Somehow along the line in my lifetime, I've come to the conclusion that maybe it's US who are the fucking problem in the world.

Ok it's time for my two minutes of hate...

insanelysane's picture

I would only blame Obama for the fact that the economic indicators were showing a recovery which made the workers believe that they shouldn't take a pay cut.  Of course if they listened to Bernie the Bankster, they would have heard him repeatedly mumble stuff about how the underlying (true, real, actual) numbers showed a different story.

BTW, the politicians are already working on another long term unemployment bill because they know the real story too.

nmewn's picture

You don't have much a sense of humor do you?

The Teamsters were on board, all the unions agreed except one union...

So now everyones out of a job, just in time for Christmas...ho ho ho.

LetThemEatRand's picture

And everyone loses everything, except management who keeps their spoils.  A point you missed.    ho ho ho.

nmewn's picture

The Teamsters looked at the books, they said you better take it if you want a job.

Is your problem with managements compensation? If so, what do you think the Bakers & Confectioners Union "management team" should be after this complete debacle?

LetThemEatRand's picture

My problem is two-fold:  1) management earns hundreds of times the average worker, which is not justified as evidenced by this story, and 2) that system exists because management is not accountable for failure under our current system.  Unions are also corrupt, which does not change 1 or 2.  Unions in their present form exist because of 1 and 2.

nmewn's picture

What does "average worker" mean...just average? High school dropout? Ex-felon on the loading dock...what?

The business was losing money hand over fist...if you're saying the union looted the business just as much as management, then I agree.

Tyler's already pointed out the unfunded pension liabilities below...its a lost a cookie instead of Rand ;-)

LetThemEatRand's picture

So what do you propose we do with the management side of the equation?

nmewn's picture

What do you mean? Management is answerable to the owners.

Who were the owners? Hostess was private and owned by Ripplewood Holdings, GE Capital & GE Capital Markets, Silver Point Finance and Monarch Master Funding.

It was dead a long time ago.

LetThemEatRand's picture

I didn't bother to check the others, but the GE entities are publicly traded so the management of those companies is -- again-- gambling with other people's money, with no fear of losing their own.   Look beyond the simple, and the answer will be revealed.

nmewn's picture

You should check Ripplewood, you might be surprised who takes advantage of "average workers"...the name Immelt speaks for itself, yes, look beyond the simple.

LetThemEatRand's picture

Hmm, GE again.  Oligarch.  Spending other people's money.   So what's your point?  Simple is complicated, yes?  Or are you stuck in the Fox News paradigm that somehow GE is supposed to be a hero to anyone other than other oligarchs?

nmewn's picture

Child, I find it humorous you think I watch Fox News when I (and others) have given you more over the last few months than Fox or HuffPo could have ever given you...for frrrreeee!

Its as simple as this...for the last time...the role of government is to protect the people FROM the oligarchs.

Its not to give anyone free shit or take anymore from the people than is needed for its limited operations. When you call on it to do more, it certainly will...with unbelievable consequences for all.

odatruf's picture

If that is a sincere question, then the honest answer is: I don't know. Every idea I've heard or come up with is a solution worse than the problem. But, I'm open to ideas.

ACP's picture

It seems both sides did loot the business, the only difference in management was able to divide the loot between fewer people.

What just boggles my mind is that union leadership would rather put their workers out of a job than - at the very least - agree to an extension in order to keep people working. "Fuck it" seems to be the motto instead of "Live to fight another day" in this case.

nmewn's picture

"It seems both sides did loot the business, the only difference in management was able to divide the loot between fewer people."

Thats my view of it as well. The "bankers/creditors" will end up owning the brand, the most important asset. Maybe they can do the dance one more time and hope they can find a chair when the music stops again.

The "average worker" that LTER is talking about would be wise to investigate who they're working for before applying for the job. Its never been enough for me to say "Honey, I got the job!"...I've always said, lets see if the the first check clears and take it from there ;-)

Urban Redneck's picture

This is the second time you have thrown out that bullshit propaganda in this thread. 

"hundreds of times the average worker" How much is "the average worker" making and how much is the "average management" making?  If the CEO was making $2.5M then 1/100 of that is $25,000, 1/200 of that is $12,500, and 1/300 of that is $6.250.

We have a Hostess employee's admission that was pulling down around $120,000.  100 times his pay would be $12M, 200 times his pay would be $24M, and 300 times his pay would be $36M.

Even if the hostess employee was the absolute highest paid union member your math wouldn't come close to working out.


Old Poor Richard's picture

Management gets performance bonuses.  Jingle Fucking Bells!  I can't figure out which racket I want to be in: burying companies in debt and ploughing them into the ground, or driving a truck for the fucking Teamsters.  Either way would make more than I do now. 


knukles's picture

Could you hum a few bars...

cranky-old-geezer's picture



And everyone loses everything, except management who keeps their spoils. 

Yes, that's how it is, companies exist for management, not workers.  Deal with it.

Augustus's picture

The Teamsters were on board because they provided part of the funding when the company came out of bankruptcy last time.

With Dickie Gephart setting up the deal for VC funding, how could it go wrong?

If there is some govt. bailout, it won't be for the workers.  It will be for Gephart.

delacroix's picture

twinkies got way too expensive. little debbies, in tennessee(non union) sells comparable snacks @ less than half the price.  I was sure obama would save the twinkies, as that's one area where he does have experience.

Hangfire's picture

Who makes Zinger's??? Remember those things I think they came in three flavors one of which was like a pink coconut frosting.  I'm going to have to do some searching around to find a suitable replacement to the hostess apple pie or "victory pie" as they are known in my fishing circle.  Always grab a victory pie from the market before heading out to fish Seabass, more often than not you get to eat it while standing over a 40# fish as it bleeds out on the deck!   

Hangfire's picture

Dammit your'e right!

Just found some very amusing web viewing by searching Hostess on ebay,  there are still plenty of victory pies out there for the right price.  

Rusty Shorts's picture girlfriend has a "victory pie"...

Nadaclue's picture

Yes, and it is one tasty pie. Tell her I said Hi. lol

knukles's picture

He's dating my mother.....