BIDDEFORD — On Thursday, Judge Robert Drain of U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y. gave final approval to Hostess Brands Inc.’s wind down plans.
He also ruled that the troubled baked goods company may pay top executives a total of $1.8 million if they meet certain liquidation goals.
Some in Maine expressed displeasure about the latter move.
“They should be ashamed to ask for bonuses for executives who just drove a company out of business,” said Congresswoman Chellie Pingree, D-Maine. “And the idea that they have to be paid extra just to stay on the job while 500 people in Maine and 18,000 people around the country don’t even have a regular paycheck because of poor management practices is outrageous.
“It’s another slap in the face to the men and women who worked so hard for that company and are now without a job,” she said.
John Jordan, the representative for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Local 334 had similar strong words about the company’s request for the bonuses and the judge who granted the request.
More than 300 employees at the Biddeford Hostess bakery belong to BCTGM Local 334.
“There’s no reason for bonuses to company executives,” said Jordan.
“It’s an insult to every American worker that these people have the gall to even ask for a bonus,” he said, adding that he believed Judge Drain was “in the pockets” of Hostess.
The Hostess Brands liquidation came about after a strike by BCTGM workers, which began Nov. 9. Hostess executives said if enough employees didn’t return to work by 5 p.m. Nov. 15 they would move to liquidate.
When picket lines at Hostess bakeries and other facilities around the country remained strong after the deadline, the company made good on its threat. The next day, it ended operations at the Biddeford bakery and nationwide.
Hostess is blaming the bakers’ strike as the reason it’s been forced to liquidate, but union workers said years of mismanagement were the reason for the company’s closure.
“We believed there was something very fishy when they hired Greg Rayburn, who specializes in liquidations, as CEO of Hostess,” said Jordan.
He said workers went on strike because a new contract that was to be imposed on Hostess workers called for deep pay cuts and benefit concessions. The contract was created as a result of the company’s bankruptcy procedures, which began in January.
In addition, he said, the company stopped paying into the workers’ pension fund in July 2011. A company lawyer told the bankruptcy court that Hostess cannot afford the monthly $1.1 million payments to that fund going forward.
Since the strike, workers’ vacation paychecks have been recalled, said Jordan.
Hostess spokesman Erik Halvorson confirmed this, saying, “Paychecks were recalled from employees who were not employed during the period for which they requested advanced (vacation) pay.”
Jordan said the union is asserting that under the terms of the employees’ current contract, they should still have health insurance coverage, while the company disagrees.
He said he’s astounded that Judge Drain would allow in good conscience the company to pay executive bonuses when it’s not making good on payments to workers, many of whom have worked for the company for a number of years.
“I don’t know why this isn’t a crime,” he said.
While Biddeford workers and Hostess workers around the country may be out of a job, at least for now, labor professor Stephanie Luce at the Murphy Institute at the City University of New York said the BCTGM strike “was an inspiring case on behalf of workers.”
Union workers today “are on a downward spiral of wages and benefits,” she said, and stated that union workers for the phone company Verizon recently accepted wage and benefit concessions even though that company is profitable.
“It’s positive,” said Luce, that Hostess workers “said enough is a enough.”
Since the liquidation process has begun, more than 100 companies have expressed interest in purchasing the company’s assets.
Jordan said the union told the company to sell early on in the process, but CEO Rayburn said there were no buyers.
Now that buyers are lining up to buy Hostess, he said, workers feel vindicated in striking.
“I haven’t heard a single regret about the strike,” said Jordan.
The relatively modern Biddeford bakery should be an attractive facility for potential buyers, Jordan said earlier in the month.
— Staff Writer Dina Mendros can be contacted at 282-1535, Ext. 324 or dmendros@journaltribune.com.
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