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Current Events & Hot Topics Current Events & Hot Topics

Hostess asks permission to pay over a million in bonuses to 19 execs

Posted by on Nov. 19, 2012 at 3:04 PM
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1 mom liked this

http://www.washingtonpost.com/business/hostess-moves-to-liquidate-as-us-seeks-trustee-control/2012/11/19/46e98922-326d-11e2-92f0-496af208bf23_story.html 

Nov. 19 (Bloomberg) -- Hostess Brands Inc., the bankrupt baker of Twinkies and Wonder bread, is seeking permission to pay bonuses to key managers while closing operations that will leave most of its 18,500 workers unemployed as it begins a liquidation that may attract bids from private-equity firms and rivals.

U.S. Bankruptcy Judge Robert Drain is to consider Hostess's request to close its distribution centers and 36 bakeries at a hearing today in White Plains, New York. Hostess said Nov. 16 that it would shut down, claiming that a weeklong strike by its bakers' union forced liquidation. The union blamed management's concession demands, while some employees blamed both sides.

 

The U.S. trustee, a Justice Department official responsible for protecting creditors, today asked Drain to take control of the liquidation away from the company. U.S. Trustee Tracy Hope Davis asked the judge to convert the case to a Chapter 7 from Chapter 11 bankruptcy, based partly on the company's intent to pay bonuses, and appoint a trustee to supervise the wind-down.

Hostess officials "have not demonstrated that the insider bonuses are permissible," Davis wrote in a court filing.

In seeking court permission for its demise, Hostess said it wants to pay as much as $1.75 million in incentive bonuses to 19 senior managers during the liquidation. Hostess is asking the judge to approve its plan -- which would result in the firing of thousands of employees -- to shut down 36 bakeries, 242 depots, 216 retail stores, and 311 hybrid depot-store facilities, according to court filings. There are 58 other leased or owned sites used for storage, warehousing of products or parking.

‘Intensive' Planning

The process requires "intensive" planning, staffing and funding, the company said. A fire-sale liquidation would damage equipment and result in improper disposal of waste materials.

It's "not a simple matter of turning off the lights and shutting the doors," Hostess said in court papers.

The baker estimated that shutting the plants will cost $17.6 million in the next three months. The plants have about $29 million worth of excess product ingredients, Hostess said.

About $6.9 million will be spent to close depots, while $8.8 million will be used to idle retail stores and $8.1 million will go to shutting corporate offices, according to a court filing. Perishable baked goods at retail stores will be sold at going-out-of-business sales, donated to charity or destroyed, Hostess said.

‘Iconic Brands'

Potential bidder C. Dean Metropoulos & Co., owner of Pabst Brewing Co., said it may seek to purchase Hostess's "iconic brands," which include Dolly Madison, Drake's, Merita and Butternut. Flowers Foods Inc., maker of Nature's Own bread and Tastykake snacks, also may pursue some of its rival's assets, wrote William Chappell, an analyst with SunTrust Robinson Humphrey, in a note to investors last week.

Flowers is "one of the most eligible acquirers" of Hostess assets and brands, Amit Sharma, an analyst at BMO Capital Markets Corp. in New York, said in a separate note, citing Flowers' management, acquisitions and "relatively small" overlap with Hostess's major markets and products. Keith Hancock, a spokesman for Thomasville, Georgia-based Flowers, didn't say whether it would bid.

by on Nov. 19, 2012 at 3:04 PM
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Replies (1-10):
Veni.Vidi.Vici.
by on Nov. 19, 2012 at 3:07 PM
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The title is a bit inflammatory. = )

Are the employes going to get back any of the pension/401k they've been cheated out of? If not, then no executives should get bonuses IMO.

lga1965
by on Nov. 19, 2012 at 3:11 PM
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Wrong. Completely wrong. The bonuses could keep the company in business.
This is why some of us think cheating employees out of health care is crappy.
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meriana
by Platinum Member on Nov. 19, 2012 at 3:17 PM
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Obviously they have no shame and no conscience if they can ask for this on top of the bonuses that were already given just prior to the bankruptcy filing. And yet people blame the GREEDY workers and Union.

mikiemom
by Ruby Member on Nov. 19, 2012 at 3:17 PM

Why it's what Hostess is trying to do?

Quoting Veni.Vidi.Vici.:

The title is a bit inflammatory. = )

Are the employes going to get back any of the pension/401k they've been cheated out of? If not, then no executives should get bonuses IMO.


Veni.Vidi.Vici.
by on Nov. 19, 2012 at 3:20 PM
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Quoting mikiemom:

Why it's what Hostess is trying to do?

Quoting Veni.Vidi.Vici.:

The title is a bit inflammatory. = )

Are the employes going to get back any of the pension/401k they've been cheated out of? If not, then no executives should get bonuses IMO.


Did I state is was bad? good golly

mikiemom
by Ruby Member on Nov. 19, 2012 at 3:24 PM

I know it's disgusting. I can't wait for some of the conservative freaks to try and defend this bullshit.

Quoting meriana:

Obviously they have no shame and no conscience if they can ask for this on top of the bonuses that were already given just prior to the bankruptcy filing. And yet people blame the GREEDY workers and Union.


shannonnigans
by Platinum Member on Nov. 19, 2012 at 3:51 PM
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The irony is delicious. We'll bust this union, and god damn, it was hard work! We deserve bonuses!!
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pamelax3
by Gold Member on Nov. 19, 2012 at 5:08 PM

smh! this is stupid

gludwig2000
by Gina on Nov. 19, 2012 at 5:33 PM
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 See, its all about the bonuses and big pay checks the CEOs and othr execs get! No, they should not be allowed to pay them these bonuses. If you don't have the money to stay open, you don't have the money for bonuses!

Sisteract
by Whoopie on Nov. 19, 2012 at 6:21 PM
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And why are pensions, benefits and salaries promised to workers not held sacred like compensation promised to top tier management?  You will hear that that well, their contract stipulates that they will be paid X no matter what outcome (even termination) occurs...why are the same promises not honored for worker bees?

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