WASHINGTON — The International Brotherhood of Teamsters on Sept. 14 said its members narrowly approved contract modifications that Hostess Brands, Inc. management and lenders required as a condition to bring the company out of bankruptcy again.
More than 4,400 Teamsters voted in a national mail ballot referendum, with 2,357 voting to approve and 2,043 voting to reject. Ballots were mailed out on Aug. 25.
“This was a difficult decision,” said Ken Hall, general secretary-treasurer for the Teamsters. “Our members are frustrated at being in the position to bail out the company again, but overall were willing to accept modifications with the hope that Hostess will recover and be in a better position in the years to come. At the end of the day, our members recognized that they can’t replace their pay and benefits in the non-union sector.”
But even as the Teamsters approved the modifications, Hostess’ second-largest union, the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union, voted on Sept. 14 to reject the deal.
Gregory F. Rayburn, chief executive officer of Hostess, earlier had said that Hostess would immediately liquidate if either one of its two largest unions voted against the proposal, but he said the company now intends to file a motion under Section 1113 and 1114 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in White Plains, N.Y., to impose the same changes ratified by the Teamsters on employees represented by the B.C.T.G.M. who voted to reject them. If granted, the relief, along with similar relief requested of the company’s other, smaller unions, will enable the company and its employees to avoid liquidation and successfully emerge from Chapter 11. Hostess already has made its final offer to the B.C.T.G.M.
Mr. Rayburn said the B.C.T.G.M.’s membership may have voted against the final offer because its union leadership “incorrectly informed members that a white knight would step in to buy the company and save their jobs, or that Hostess would return with a better offer.”
“It has been suggested to our B.C.T.G.M.-represented employees by their union leaders that unidentified parties may be prepared to invest in or purchase Hostess or a significant portion of its baking facilities if the Company's proposal was rejected,” Mr. Rayburn said. “This is not true. There is no white knight. There is no better offer. Our only option to save Hostess, preserve jobs and avoid liquidation is to amend our labor agreements.”
The Company plans to seek approval of its 1113 motion at a hearing to be held on Oct. 3.