Bankrupt Twinkie-maker Hostess Brands Inc. is going toe-to-toe with its workers’ union in a clash that the company said may lead to its own liquidation.
A two-day trial began Tuesday in which Hostess will try to convince a federal bankruptcy judge in New York to allow it to reject its existing collective bargaining agreements with the Teamsters and bakers’ unions.
The Ho Hos, Ding Dongs and Wonder Bread maker filed for Chapter 11 protection in January, less than five years after emerging from its last bout of bankruptcy. Its “unsustainable and uncompetitive cost structure” -- which included high expenses related to labor, infrastructure and corporate overhead -- was largely to blame, the company said.
The unions have rejected the company’s final cost-cutting proposal, which would lower pension benefits for the organizations’ members, tighten work rules and outsource some delivery work. Hostess is hoping that the judge, who is expected to rule in mid-May, will allow the Texas company to implement its plans anyway.
But if Hostess’ request is granted, the unions have threatened to strike. The company said such an action would immediately force it to liquidate, causing its brands and its 18,500 jobs to disappear.