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Pew Law Center Blog
November 20, 2012 Lawrence 'D' Pew

Judge Gets Hostess and Bakers Union into Mediation

The bankruptcy judge presiding over the Hostess Brands, Inc., Chapter 11 case responded to the cupcake debtor’s motion to liquidate with a judicial request to mediate. Why mediate? There’s just too much at stake to not give it the old college try.

Hostess and the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union (“Bakers”) were at an impasse on November 15 when the Bakers refused to end their strike. Hostess filed a motion to liquidate with the bankruptcy court the following day, carrying out its promise to close its doors forever if the strike didn’t end immediately. The judge was scheduled to hear that motion the following Monday, November 19, but the result wasn’t what Hostess expected.

Bakers Union and Hostess Give Mediation a Try

In the most recent proceeding at the White Plains, NY, bankruptcy court, Judge Robert Drain sided with sanity. “Many people, myself included, have serious questions as to the logic behind this strike. Not to have gone through that [mediation] step leaves a huge question mark in this case.” To allow for mediation on November 20, Hostess’ motion to wind down operations was adjourned until the following day.

Mediation can be a powerful tool in resolving disputes, even when the parties have drawn a line in the sand. In this case, Hostess and the Bakers union have agreed to try mediation in a last ditch effort to overcome their differences with the help of a third party facilitator, the mediator. About 5,600 of Hostess’ 18,500 employees are members of the Bakers union.

If no agreement is reached through voluntary mediation, Hostess will immediately continue pursuing an order to liquidate operations.

Is Mexico’s Grupo Bimbo the Next Hostess With the Mostest?

El Grupo Bimbo – a Mexican family-owned company estimated to be worth $4 billion and which already owns brands Entenmann’s, Thomas English Muffins, Sarah Lee, Ball Park, Brownberry, Mrs Baird’s, Earth Grains, and more – is taking another look at purchasing Hostess.

In fact, Grupo Bimbo offered to buy Hostess a few years ago for $580 million. With the current value of Hostess down around $135 million and with the low price of Mexican sugar (U.S. trade tariffs keep sugar prices high for U.S. companies like Hostess), Grupo Bimbo is taking another look at a purchase offer. But so is ConAgra and the Flowers Food company of Nature Valley fame.

Bimbo Twinkies? Food for thought…

Chapter 11 Bankruptcy Resource:

At Judge’s Urging, Hostess and Union Agree to Mediation

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