Hostess looks to reject bakery union collective bargaining agreements

By Caroline Salls

Pittsburgh, Sept. 20 - Hostess Brands, Inc. requested court approval to reject its collective bargaining agreement with local affiliates of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCT), according to a Sept. 20 filing with the U.S. Bankruptcy Court for the Southern District of New York.

The company is also seeking court approval to modify any obligation it has to provide non-pension retiree benefits to retirees formerly represented by the BCT.

Hostess said negotiations with the BCT began in July 2011.

However, in mid-2012 the union refused to negotiate with the company until Hostess had reached an agreement with the International Brotherhood of Teamsters. As previously reported, Hostess reached an agreement with the Teamsters in early August.

According to the motion, the company repeatedly warned BCT leadership that it would have little negotiating flexibility once a deal was reached with the Teamsters, because all employees would have to be treated similarly.

"Nevertheless, the BCT chose to sit on the sidelines for months," Hostess said in the rejection motion.

Once it reached an agreement with the Teamsters, the company said it immediately turned to the BCT to negotiate a similar proposal.

After a few weeks of additional discussions, Hostess said the BCT leadership agreed to put the company's last proposal out for a vote among the local unions that represent Hostess employees.

Immediately after agreeing to solicit a vote, however, Hostess said BCT leadership began aggressively lobbying the local leadership and the membership to reject it.

Proposal mischaracterized

Hostess said the BCT leadership convinced most of its membership to vote down the proposal by mischaracterizing the proposal and promising, without any evidence, that a buyer was waiting in the wings to purchase some or all of the company's bakeries as going concerns.

The company said employees covered by nearly all of the 115 BCT collective bargaining agreements have voted against the proposal.

"Contrary to the BCT leadership's irresponsible representations otherwise, Hostess does not have a prospective buyer interested in acquiring some or all of its bakeries as going concerns," the company said in the motion.

"Hostess and its financial advisors have determined that implementation of the BCT proposal (together with relief Hostess is seeking from its other constituents) will give the debtors their only chance to survive.

"Absent the relief requested in this motion, it is certain that Hostess will be forced to liquidate, and 6,500 BCT member jobs (as well as the jobs of over 11,500 other employees) will be eliminated."

As a result, the company said it is seeking court approval to reject the BCT collective bargaining agreements so it can modify the contracts for BCT-represented employees that did not ratify the proposal.

A hearing is scheduled for Oct. 3.

Hostess Brands, an Irving, Texas-based operator of regional bakeries, filed for bankruptcy on Jan. 11, 2012. Its Chapter 11 case number is 12-22052.

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