Hostess imposes wage-cutting contract on workers to avoid going under

Court grants bankrupt company permission to override union’s rejection of the agreement

Snack cake maker Hostess Brands Inc. has been trying desperately to scramble up the sides of the well of bankruptcy. The second of two bankruptcies, to be exact. The latest foothold it has found is bound to be unpopular with its employees: It got court approval to impose a pay-cutting collective bargaining contract on its workers in a bakery union.

The Bakery, Confectionary, Tobacco and Grain Millers International Union’s 6,500 members rejected Hostess’s contract out of hand when it was first proposed, as the agreement will cut workers’ wages by 8 percent and reduce benefits as well. 

But Hostess convinced the court that imposing the contract would be the only way to keep the business from going under, and Judge Robert Drain gave the company the permission they sought. The court already gave Hostess permission to reject other union contracts earlier this year.

Read more at Thomson Reuters.

 

For more InsideCounsel coverage of bankrupt companies, see below:

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