Wednesday, 28 September 2016
Last updated 4 hours ago
Nov 20 2012 | 12:44pm ET
Twinkie-maker Hostess Brands won a two-day reprieve after its private equity and hedge fund owners agreed to mediation with a union.
Hostess had sought permission yesterday to lay off most of its 18,500 works and to liquidate. But U.S. Bankruptcy Judge Robert Drain in White Plains, N.Y., wouldn't give the go-ahead just yet, insisting that two sides meet again today—with him as mediator.
Hostess, which is owned by Ripplewood Capital and has Monarch Alternative Capital and Silver Point Capital as its leading creditors, filed for bankruptcy last week, blaming a strike by the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union. That union ordered a work stoppage after refusing to accept a contract approved by Drain that other unions had agreed to.
Drain said he was concerned that neither side had exhausted all efforts to avoid a liquidation of the company, which also makes Wonder Bread and dozens of other products. He cited the union's failure to formally contest the last-and-best contract it rejected.
If the mediation should fail, Hostess may disappear but most, if not all, of its products will likely go on. Several private equity funds, including Metropoulos & Co. and Sun Capital Partners have expressed interest in buying the company.
"I think that we could offer a slightly better, more labor-friendly deal than what was on the table last week," Sun Capital's Marc Leder told Fortune magazine. "We also think that one point the unions have made is that there hasn't been a great amount of reinvestment in the business. We've found that investing new capital into companies like this can by very positive for brand, people and profitability."