On Monday, Hostess Brands asked the U.S. Bankruptcy Court for the Southern District of New York for permission to close and liquidate all assets. But at the insistence of Judge Robert Drain, the firm agreed to negotiations with the striking union — The Bakery, Confectionary, Tobacco Workers, and Grain Millers International (BCTGM). If the two sides can’t reach agreement, liquidation will resume.
“My desire to do this is prompted primarily by the potential loss of over 18,000 jobs as well as my belief that there is a possibility to resolve this matter,” said Judge Drain.
Neither side seems hopeful. Hostess attorney Heather Lennox advised the court last week’s strike served to weaken the company beyond salvation. “At this point … our customers know we’re going out of business. It would be very hard for us to recover from this damage … even if there were to be an agreement in the near term.”
And, according to Bakers Union attorney Jeffrey Freund, the union has made its demands “crystal clear” by reiterating them “again and again and again and again.”
Today’s mediation is the final hope to revive the 85-year-old iconic wholesale baker. Some are optimistic Hostess Brands can be saved. Nick Kalm, a communications consultant who specializes in labor relations,says the discussion could make both sides more willing to cooperate. “It makes it much more likely that the company will put forward something that is less draconian… and the union will take it,” noted Kalm. “The union realizes they are out of options.”
If today’s unexpected mediation can bridge the expansive divide between management and the union, Hostess and its employees may yet go on to see another payday.