Besides causing a massive push by Twinkies fans fearful of the disappearance of their iconic snack, today's announcement by management of the liquidation of the Hostess bakery company also throws into question the employees' retirement benefits – current and future.
With news that the company has decided to shutter 33 plants across the country and get rid of 18,000 employees – citing the costs related to a strike that began Nov. 9 after bankruptcy judges approved an 8 percent cut in wages and a reduction in benefits – the federal Pension Benefit Guarantee Corporation says it will help as much as it can if the decision to close sticks.
"We hope the parties can reach an agreement that allows Hostess to stay in business in order to preserve jobs and protect pensions," said J. Jioni Palmer, senior advisor and director of communication for the PBGC. "However, PBGC exists to safeguard retirement security in uncertain times, and that's what we'll do for the 2,300 men and women in Hostess's single-employer plan if the company liquidates. The plan is underfunded by about $55 million."
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Palmer added that the broad nature of the company – noted not only for its snack cakes but brands including Wonder Bread, Nature's Pride, Dolly Madison, Home Pride and more – also means a complicated series of retirement arrangements he hopes can be preserved.
"Hostess belongs to 42 multiemployer plans, but its liquidation wouldn't cause those plans to immediately become insolvent," Palmer said. "PBGC doesn't take responsibility for multiemployer plans, but instead gives financial assistance to the plans that can't pay benefits."
Hostess union reps, who represented 30 percent of the company's employees, continue to blame management for the stalemate which led to Friday's closures.
"The crisis facing Hostess Brands is the result of near a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share," said representatives of the Baker, Confectionary, Tobacco Workers and Grain Millers International Union.
Company officials say the firm, based in Irving, Texas, would have lost more than $9 million through Nov. 19 due to lost profits.
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