Hold on, all you people hoarding Ding-Dongs and Ring-Dings: Hostess and its striking union, the Bakery, Confectionery, Tobacco Workers and Grain Millers' International Union, have agreed to mediation, in an attempt to prevent the company from liquidating and save the jobs of 18,500 workers. The Wall Street Journal reports that Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y. said, "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 that the debtors have incurred over the last week or so and the difficulty of reorganizing this company in the first place."
Drain also announced that in addition to the two parties, the bankruptcy vendors and reps from the Teamsters (which is the biggest union employed by Hostess) will also be part of mediation proceedings, "The parties are going to give it their best shot." Earlier today, a U.S. Trustee found Hostess's wind-down proposal too generous to executives: "The 82-year-old Hostess wants permission to pay senior management a bonus of up to 75 percent of their annual pay so they will stay on and help wind-down the business."
Hostess, which is hundreds of millions in debt, has been demanding wage and pension concessions from its workers. The Teamsters eventually agreed, but the Bakers Union refused, setting the stage for last week's liquidation announcement.
Hostess told the judge today that the workers' strike had damaged its business: "At this point, your honor, our customers know we're going out of business. 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." But the judge wondered why they didn't try to mediate the labor dispute. Drain also questioned why the Bakers Union didn't object to labor concessions in court, and called the group's lack of action "unusual, to say the least, and perhaps illogical."
Other suitors, such as the holding company for PBR, remain in the wings to make a bid on Hostess and its brands.