Bloomberg reports that Hostess Brands will seek permission from a bankruptcy judge to pay executives as much as $1.75 million in bonuses to oversee the liquidation of the company and lay off 18,500 workers. Hostess, which filed for bankruptcy in January for the second time in eight years, announced on Friday, November 16 that it would liquidate the company rather than seek a fair deal on a new contract with striking bakery workers.
The workers went on strike on November 9 after Hostess tried to implement terms of a final offer that 92 percent of BCTGM members rejected in September. The final offer would have cut wages by 8 percent, increased worker health care costs by 20 percent, and ended eight-hour work shifts.
Workers rejected the offer because in 2009 they agreed to concessions that helped get Hostess out of its first bankruptcy, then watched as money that should have been used to invest in making the company strong again was diverted to pay executive bonuses, a large debt obligation, and fees to the private equity companies.
Before declaring bankruptcy, Hostess stopped paying money into the workers’ pension. BCTGM estimates that Hostess now owes $160 million to the workers’ pension.
Meanwhile, Richard Trumka, president of the AFL-CIO, blasted the private equity firms, Ripplewood Holdings, Monarch Alternative Investments, and Silver Point Capital, which own Hostess, and praised the striking workers for taking a stand against Wall Street greed:
Pundits should be applauding the bakery workers of Hostess Brands for standing up to Wall Street interests and standing for decent working standards and the middle class.
The truth is that the Bain-style vulture capitalists invested in Hostess to profit not by making quality products, but by bleeding the company of every dollar before discarding it.
They’re doing it because they can, because that’s what Wall Street speculators do when they get their hands into a company’s till.
And today, the millionaires are walking away, with an added twist. They’re blaming the bakers and others who faithfully made the iconic Twinkies and other Hostess goods for decades—not for untold riches but for a decent paycheck and good benefits.
Trumka said that in 2011, Hostess reported sales of $2.5 billion but ended up losing $341 million because of payments on nearly $1 billion worth of debt that the private equity companies took on to purchase Hostess.
Trumka said that it was heartbreaking to see so many workers hurt by Wall Street greed, but that he is inspired the courage of the bakery workers who have taken a stand against this greed.
“The unified bakery workers rejected the last cruel deal from executives by a vote of 92 percent. They chose to raise their heads with pride, as well they should,” Trumka said. “One way or another, working people in America have to stop this race to the bottom.”