Will Unions Kill the Twinkie?

Hostess, the country’s largest bakery, could declare bankruptcy as early as this month, unable to make its loan payments and still keep contributing to union pension plans. Hostess has not paid in to future pension benefits since August, breaking its union contracts. The Teamsters and the Bakery Workers Union would need to agree to contract changes to keep the company afloat and neither has shown any signs of budging.

“We understand that, should we pursue some form of legal action to require the company to live up to the terms of the contract, they may close, but we have come to believe that they will close anyway.”

Hostess filed for Chapter 11 in September 2004 and spent 4 1/2 years there before changing hands in 2009 and gaining union concessions. There is a concern that if it files again, the result could be liquidation with many of its brands, including Hostess, Wonder, Nature’s Pride, and Drake’s, sold for cash.