From Zero Hedge:
Last week, when discussing the next steps for the company, and specifically the hope that mediation may resolve the epic animosity between management and workers, we stated that "What makes a mediation improbable is that the antagonism between the feuding sides has certainly hit a level of no return: 'Several unions also objected to the company's plans, saying they made "a mockery" of laws protecting collective bargaining agreements in bankruptcy. The Teamsters, which represents 7,900 Hostess workers, said the company's plan would improperly cut the ability of remaining workers to use sick days and vacation
Sure enough, moments ago, we learned that mediation has now failed and the liquidation may proceed. And since, in America, nobody understands that proper sequence of events involved in a bankruptcy liquidation, where the valuable parts always end up being acquired by someone, in this case the Twinkie brand and recipe, let the pointless eBay bidding wars over twinkies continue.
As for what really happens next, if indeed [Grupo] Bimbo is prohibited from acquiring the assets in the Stalking Horse auction due to anti-trust limitations, then the buyer will almost certainly be a "financial", i.e., another [private equity] firm, whose coming means the end of any hopes and dreams of preserving union status at fresh-start Hostess, or whatever the new firm will be named.
From the WSJ:
Hostess Brands Inc. said Tuesday night it would proceed with liquidation plans after mediation fails.
Earlier Tuesday, the head of the bakers union whose strike precipitated Hostess liquidation plans didn't attend a last-ditch mediation session and wasn't hopeful about its prospects, he said.
"I'm not too optimistic about this mediation," Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, said when reached earlier Tuesday afternoon in Columbus, Ohio. He said he couldn't get to New York, where the session was taking place; instead, he said, the union's secretary-treasurer was attending...
... Doug Mansky, a Hostess driver in Detroit and a member of the International Brotherhood of Teamsters, was in the process of moving to a cheaper condominium on Tuesday, after his union had agreed to an 8% pay cut that he said would shave $200 a week from his income. After Judge Drain cleared Hostess to impose the same new labor terms on the bakers union, they went on strike.
"I hope things work out. I'm going to be 49 and trying to find a job in a market that's terrible," Mr. Mansky said.
Sadly, the reality of learning just how bad the labor market truly is, all smoke and mirrors of a recovery aside, will now have to be experienced by not only Mr. Manksy but 18,499 of his fellow co-workers, who may have been duped into hoping by their union that by holding out a hardline stance, they would gain something.
They have now lost everything. And not too unexpectedly, the workers are now turning on the union!
... This would be a truly fantastic drama, if people's lives were not at stake. And no, not one former Hostess worker will retain his job at the new company: that much is certain.
As we said, if only people had a basic understanding of how bankruptcy truly worked, and what the real state of the economy was, then Hostess' workers may have had a chance and some amicable compromise would have been possible.
Then again, if people in America actually understood economics and simple finance...
Read full article...
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An iconic American brand could be just days away from liquidation