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Hostess, unions planning mediation to avoid liquidation

Scott Tong Nov 20, 2012
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Hostess, unions planning mediation to avoid liquidation

Scott Tong Nov 20, 2012
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Hostess Brands may not be dead after all. The company’s management and workers will be back at the bargaining table one last time today to try and avoid liquidating the company. A private mediation will take place behind closed doors.

The judge involved in the process said his goal was to save 18,500 jobs, and that all options to avoid liquidation had not yet been exhausted. He also made specific reference to the bakers’ union intransigence.

Earlier this month, the bakers were faced with wage and benefit cuts. Instead of contesting them in court they walked off the job.

Having a third party involved could change the dynamic of the negotiations — allowing for a bit more space on each side.

“In a sense you are laying it off on the mediator,” says bankruptcy lawyer Bob Michaelson. “You don’t have to take direct responsibility for the result. You can say we have a third party and we heard what had to happen. We’re not pleased with the result but it’s the best we can get.”

Michaelson also adds that there was always gamesmanship involved here — but now both realized they could lose here.

“They both realized everyone wound up losing,” he says. “So how do you salvage something and also salvage face?”

The 12th hour mediation has brought new information to the table. One private-equity firm is interested in buying Hostess altogether.

And there’s an outpouring of Twinkie nostalgia — potential signs it may be worth keeping the firm intact.

If they can’t agree today, Mike Kelly at Brand Value Advisors says it’s clear who gets hurt here.

“The executive suite will be fine. And those guys can always go out and get other jobs, I would assume,” Kelly points out. “But labor obviously has the most to lose.”

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