The Chicago Employment Law Blog

Reprieve for Local Hostess Workers? Judge Orders Mediation

Just when you thought they were out, the judge pulled them back in! Late last week, Hostess Brands, Inc. declared its intention to shutter its factories and sell off its assets after negotiations with the union failed and a strike "crippled" the company. The announcement set off a panic for Twinkie-lovers and heartache for hundreds of local workers, who were set to be laid off from their jobs with the struggling snack maker.

Two days after the doors to the factory were closed, and every retailer in America sold out of Twinkies, HoHos, and Ding Dongs, hope emerged in the form of ordered mediation, reports Reuters. Judge Robert Drain, who is overseeing the bankruptcy proceedings, questioned why the mediation had not yet occurred and asked the parties whether it might help.

By Wednesday, we should have an answer. Judge Drain delayed the bankruptcy proceedings for two days and ordered the parties to attempt to mediate the dispute tomorrow. The issue, as always, is money. While workers had previously agreed to changes to the pension plan and an eight percent reduction in pay, the union nixed the plan, arguing that workers had given up enough already.

Hostess called the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union's bluff and shuttered operations. The move was expected to cost 18,000 jobs. Should mediation lead to a deal, it could save many of those jobs, just in time for the holidays.

If the mediation fails, the union is still holding out hopes for a bail out, reports Fox News. The brands have obvious appeal, as evidenced by the weekend hysteria over the loss of Twinkies. Hostess also reported that revenue was strong, though outweighed on the balance sheet by pension obligations and high salaries. The union is hoping that if a buyer of Hostess' brands emerges during the bankruptcy proceedings, the buyer will rehire laid-off employees.

Hostess' Chief Executive told Fox News that such a miracle was unlikely, as the company had searched for buyers in the past few years, and no one was interested in taking on the "old plants or these unions or these contracts."

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