NEW YORK — Hostess Brands, Inc. on Sept. 20 filed a motion in the U.S. Bankruptcy Court Southern District of New York seeking court approval to impose a new collective bargaining agreement on the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. The filing comes after 92% of the union’s members voted against accepting Hostess’ labor contract.
Meanwhile, Hostess’ other large union, the International Brotherhood of Teamsters, on Sept. 14 said its members narrowly approved the contract modifications.
In its Sept. 20 filing, Hostess said that immediately after agreeing to solicit a vote on its proposal, leadership of the B.C.T.G.M. “began aggressively lobbying the local leadership and the membership to reject it.”
“Mischaracterizing the proposal and promising — without any evidence — that a buyer was waiting in the wings to purchase some or all of the debtors’ bakeries as going concerns, the B.C.T.G.M. leadership succeeded in convincing most of its membership to vote down the debtors’ proposal,” Hostess said.
Hostess has maintained it does not have a prospective buyer interested in acquiring any of its bakeries as going concerns, and said in the Sept. 20 filing that implementation of the B.C.T.G.M. proposal — together with relief from its other unions — is its “only chance to survive.”
Hostess on Jan. 25 filed its first motion to modify its collective bargaining agreements with its union. At that time, the company sought to modify compensation packages provided to its employees to levels on par with similarly-situated workers and to modify work rules that impeded the efficient operations of the company’s business. Hostess also sought to exit all but two of the multiemployer pension plans covering its Teamster-represented employees and all multiemployer pension plans covering its B.C.T.G.M.-represented employees.
In subsequent months, Hostess revised its turnaround plan to account for its deteriorated financial condition, specifically noting that prices of commodities the company uses had spiked. In addition, Hostess said its longer-than-expected stay in bankruptcy had affected its ability to implement several of its turnaround plan initiatives, and a significant portion of the company’s private label customers failed to renew their contracts. As a result, Hostess on Aug. 29 made its last, best final offer to the B.C.T.G.M., including wage cuts of 8% in year one and a reduction in benefits.
Hostess said it has proposed “nothing more than is necessary” to give it the “best (and only) chance to reorganize as a going concern.”
“Without the relief sought here, the debtors will lose the support of their DIP lenders, prepetition lenders and the (Teamsters) and will be forced to liquidate,” Hostess said. “The B.C.T.G.M. has not proposed any alternative solution under which such a result could be avoided. Accordingly, the B.C.T.G.M. did not have a good cause to reject the B.C.T.G.M. (last, best final offer).”
A hearing on the motion is scheduled for Oct. 3.