Hostess Delays Liquidation, Will Meet With Union

Hostess Brands and its second-largest have agreed to a day of mediation to see if they can end a strike by bakers and prevent the company from shutting down. The parties will meet Tuesday with a bankruptcy judge. He announced on Monday that he wasn't ready to approve a liquidation.

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RENEE MONTAGNE, HOST:

And use now that Twinkie is not dead yet, and it's so popular it may never die, no matter what happens to its maker, Hostess Brands. But what's happening right now is that Hostess Brands and the union representing its striking bakers have agreed to a day of mediation to see if they can come to an agreement that will prevent the company from shutting down. The parties meet today with a bankruptcy judge, who announced yesterday he wasn't ready to approve a liquidation.

NPR's Ailsa Chang reports.

AILSA CHANG, BYLINE: The Twinkie maker says it's going to take this opportunity to try to save the company and 18,000 jobs, but...

LANCE IGNON: Whether that opportunity can actually lead to something is anyone's guess.

CHANG: Lance Ignon is a company spokesman. What isn't a mystery, he says, is how expensive this delay will be for Hostess. It costs a million dollars a day just to fund payroll. So if the mediation fails, Hostess expects to go right back to court on Wednesday and ask for the liquidation to begin. The ailing business has filed for bankruptcy twice and has been trying to sell itself off. But it says potential buyers weren't biting because the union contracts - especially the pension benefits - were just too costly.

IGNON: There's no one that's going to come in and purchase the company on exactly the same terms that was leading to the company's liquidation.

CHANG: And that's why labor experts say if a new buyer swoops in, it may not be the white knight workers are hoping for. Calls to the bakers union weren't returned. Hostess says no one has offered to buy the company whole - so it's going to let buyers chew off bits and pieces. Each buyer gets to renegotiate a labor contract. If Hostess is broken up, the workers would likely have less bargaining power. And the new owner might be less generous.

Stacy Hickox is a labor professor at Michigan State University.

STACY HICKOX: If they were purchased by another company that paid lower wages or had lower benefits for their employees, then the former Hostess employees would most likely be paid in line with those other employees.

CHANG: Even if buyers do grab up some of its bakeries, Hostess expects many others won't get bidders. So no matter what, if there's a liquidation, the company says a lot of Hostess employees will be out of a job.

Ailsa Chang, NPR News.

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