“Bankrupt Hostess Brands Inc. and its striking union agreed to enter into mediation to try to resolve their differences,” confirms the Los Angeles Times, “putting the baking company’s planned liquidation on hold for now.” The 82-year-old company sought permission to begin shutting down its business at a U.S. Bankruptcy Court hearing Monday. “Instead,” the Times reports, “Judge Robert Drain urged Hostess and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union to consider mediation.” The two sides agreed to try to work out their differences, which could preserve more than 18,000 jobs.
Business Week adds that Hostess and the bakers’ union will be entering confidential mediation under Drain’s supervision. The judge commented, “To me, not to have gone through that step leaves a huge question mark over this case which I think will only be answered in litigation. My desire to do this is prompted primarily by the potential loss of over 18,000 jobs, as well as my belief that there is a possibility to resolve this matter, notwithstanding the losses the debtors have incurred over the last week or so.” Hostess has reportedly not spoken with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union since August. The company is seeking permission to pay bonuses to key managers while closing operations.
The editors of the New York Daily News point out that if the union does not make concessions, it will have to accept the certain loss of jobs for its members. The newspaper urges that the decision “must be made by the workers themselves in a secret vote.” At the time of this bankruptcy, Hostess reports that it had 372 collective bargaining pacts, 80 health and benefits plans, 40 pension plans, and $100 million in retiree health benefits. Company officials called on unions to take an 8 percent reduction in pay and to shoulder 17 percent of health costs, up from zero.