Hostess Brands granted court OK to reject bakery union contracts

By Caroline Salls

Pittsburgh, May 4 - Hostess Brands, Inc. received court approval to reject collective bargaining agreements with the 35 local affiliates of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

At the union's request, the court dismissed the company's motion to dismiss any "March CBA" that terminated before entry of the rejection order.

If the parties are unable to agree on whether the remaining March CBAs are terminated, the court said it would conduct an evidentiary hearing by May 16 to make that determination.

The company also received court approval to modify any benefit obligations it has under specified proposals to retirees formerly associated with the bakery union to the extent those benefit obligations constitute retiree benefits under the Bankruptcy Code.

As previously reported, Hostess requested court approval last month to reject additional collective bargaining agreements with 57 local affiliates of 10 separate unions.

"Unless Hostess is relieved of a variety of obligations imposed by its collective bargaining agreements, a successful reorganization will not be possible," the company said in the second rejection motion, which was filed on April 23.

"A failed reorganization, in turn, will lead to the loss of thousands of Hostess jobs.

"The debtors are in a dire financial position.

"Despite its strong brands and popular products, Hostess has been losing money for some time and, absent significant changes, will not survive.

"That is the case because Hostess is trying to compete while burdened with a cost structure that, due largely to its labor costs, is simply not competitive with other market participants."

Hostess Brands, an Irving, Texas-based operator of regional bakeries, filed for bankruptcy on Jan. 11. Its Chapter 11 case number is 12-22052.

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