Hostess Liquidation Too Sweet for Managers, U.S. Says.
Source: nyt/reuters
Hostess Brands Inc, the maker of the iconic Twinkies snack cake, will square off in a bankruptcy court on Monday against an agent of the U.S. Justice Department, who says the wind-down plan is too generous to management.
The U.S. Trustee, an agent of the U.S. Department of Justice who oversees bankruptcy cases, said in court documents it is opposed to the wind-down plan because Hostess plans improper bonuses to company insiders.
The 82-year-old Hostess wants permission to pay senior management a bonus of up to 75 percent of their annual pay so they will stay on and help wind-down the business.
The U.S. Trustee, Tracy Hope Davis, planned to ask New York Bankruptcy Court Judge Robert Drain at Monday's afternoon hearing to appoint an independent trustee to oversee the sales of the company's assets.
Several unions also objected to the company's plans, saying they made "a mockery" of laws protecting collective bargaining agreements in bankruptcy. The Teamsters, which represents 7,900 Hostess workers, said the company's plan would improperly cut the ability of remaining workers to use sick days and vacation.
Read more: http://www.nytimes.com/reuters/2012/11/19/business/19reuters-hostess-bankruptcy-hearing.html?hp
hedgehog
(36,286 posts)PoliticAverse
(26,366 posts)aquart
(69,014 posts)I doubt there's a huge demand for their services that they need that huge incentive to stick around.
Let them leave. It shouldn't make things any worse than they already are for the company.
AndyTiedye
(23,500 posts)elleng
(131,237 posts)are_you_serious_1234
(54 posts)That's rich. (Puns intended)
bloomington-lib
(946 posts)xtraxritical
(3,576 posts)The public's response of hording Hostess products guarantees it.
DirkGently
(12,151 posts)... rather than face possible conversion to Ch. 7.
http://www.chicagotribune.com/business/breaking/chi-judge-hostess-union-agree-to-mediation-20121119,0,2355592.story
elleng
(131,237 posts)Hostess, its lenders and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) agreed to mediation at the urging of Bankruptcy Judge Robert Drain of the Southern District of New York, who advised against a more expensive, public hearing regarding the company's liquidation.
"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," Drain said.
http://www.democraticunderground.com/1014311122
DirkGently
(12,151 posts)But it sounds like the "urging" included a likelihood of conversion to Ch. 7.
elleng
(131,237 posts)DirkGently
(12,151 posts)The judge made clear -- probably most strongly to Hostess -- that it should reconsider going to final hearing on its liquidation plan. The U.S. Trustee was opposed, based in part on proposed "retention bonuses" and was asking the case be converted to a Ch. 7, which would take the ball out of management's hands and put a panel trustee -- a court-appointed liquidator -- in charge.
Judges do this all the time. It's not an order, so much as a strong hint that you maybe don't want to see what an Order would say, if you pushed things further.
mulsh
(2,959 posts)here's the Wall Street Journal's take on the matter.
http://online.wsj.com/article/SB10001424127887323713104578131502378821868.html
Ash_F
(5,861 posts)The company was going down no matter what thanks to their negligence. They were just milking it for as much as they could before it went down.
Selatius
(20,441 posts)They buy a company. They make the company take on debt. A hefty chunk of that debt is large bonuses to senior executives and shareholders who are in on the game. Then they dump the company either before or during its Ch. 11 bankruptcy.