- Last Updated: 9:09 AM, June 14, 2012
- Posted: 12:11 AM, June 14, 2012
With the clock ticking, creditors of bankrupt Hostess Brands and its unions remain far apart on a deal to save the company from liquidation.
Creditors, led by hedge fund Silver Point, on Tuesday rejected the latest plan from the Teamsters union to reorganize the company, and countered with a new plan that is unlikely to bridge the divide, sources said.
“It’s pretty far from what the Teamsters would likely find acceptable,” according to one source.
The creditors have provided a $75 million loan to Hostess, the maker of Twinkies and Wonder Bread, to allow it to operate in bankruptcy. Lenders could pull their financing if Hostess doesn’t hit certain financial targets.
“We’re getting closer to the end of the line,” said another source.
The two sides have been negotiating for 10 months over labor and pension concessions.
Since Hostess filed for Chapter 11 bankruptcy protection in January, the company and its unions have continued to lock horns. Hostess employs 18,000 workers.
Private-equity firm KPS Capital Partners offered to acquire Hostess, but both the creditors and the Teamsters rejected that bid.
It is possible that KPS could re-enter the picture if the two sides reach a compromise, said a source.
On an internal call last week, Hostess management said that all potential buyers had fallen through but did not believe that creditors would force the company to liquidate, according to a Hostess insider.
Silver Point has hundreds of millions invested in Hostess, according to sources, and could lose money in liquidation if the company is broken up and sold off in pieces.
Still, there are likely buyers for many of Hostess’ brands where the new owners would not need to assume union contracts or pensions, said a source.
The Teamsters contend Hostess is demanding too many concessions, and the union wants the company to continue to contribute to 22, mostly underfunded, pension plans.
The Teamsters say employees who have worked for Hostess would lose their accrued benefits if they left their existing plans and moved to a single pension plan, which is what the company has proposed.
Meanwhile, Hostess isn’t replacing workers who are leaving the bankrupt company.
A long-time Brooklyn Hostess driver told The Post that he was recently told to pick up part of a new route in Brooklyn.
A Hostess spokesman did not return calls.