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Hostess bidding process begins; Hostess bidding process begins

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Dolly Madison employees picket outside the factory Nov. 15 on U.S. 31.
Dolly Madison employees picket outside the factory Nov. 15 on U.S. 31. PHOTO BY ANDREW LAKER

A handful of bakers union pickets continued to protest in front of the closed Hostess-owned Dolly Madison plant in Columbus on Wednesday, even as a New York bankruptcy court judge ruled a “liquidation sale” of Hostess’ plants, equipment and food brands can proceed.

The decision to sell off Hostess’ assets to one or more bidders left 18,000 bakery workers nationwide uncertain about their future over the Thanksgiving holiday. That includes more than 200 unemployed workers at the Dolly Madison plant on National Road.

At the shuttered local plant, tractor-trailer rigs blocked entrances and a half-dozen striking union members continued to camp out in a show of unity. On Wednesday, a handmade placard nailed to a utility pole read: “Hostess stole my family pension.” Another red-and-white sign at ground level pointed to the factory, indicating: “For Sale by Owner.”

Meanwhile, Hostess’ attorneys said the company has received a “flood of inquiries” from a range of parties interested in buying several of its brands, and as many as 50 companies have signed nondisclosure agreements, which means they likely plan to evaluate company assets and weigh how much they might bid for certain parts of Hostess Brands.

Larry Duncan, business agent for Local 132 of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union here, said he wasn’t surprised by the court ruling allowing the asset sale to proceed.

The union leader said a 24-hour reprieve on Tuesday, a time when Hostess and its unions attempted but failed during mediation to settle their differences, was “all for show.”

Duncan’s assessment was short and direct.

“The judge was just trying to cover his bases,” Duncan said of U.S. Bankruptcy Judge Robert D. Drain, who had directed both sides to talk one last time.

Potential buyers

In court, at a four-hour bankruptcy hearing Wednesday, Drain heard testimony from Hostess CEO Gregory Rayburn, who urged selling the bakery’s assets quickly.

“The longer you’re off the shelf, the less value you’re going to get,” Rayburn said in court.

News reports have suggested that investment companies such as Sun Capital Partners and C. Dean Metropoulos & Co., the owner of Pabst Blue Ribbon beer, are interested in buying some or all of Hostess’ operations. Flowers Foods of Thomasville, Ga., also might be interested, food industry analysts have said on Wall Street.

In Wednesday’s hearing in U.S. Bankruptcy Court in the Southern District of New York, Hostess lawyer Heather Lennox of Jones Day said the company expects to find “stalking horse” bidders for some of its brands within a few weeks, with court-supervised auctions to follow. A stalking horse is a company selected to make the first bid for a bankrupt company’s assets, with other contenders later getting a chance to top it.

“We’re hoping a bakery company buys us,” Duncan said Wednesday.

Hostess has said the sale of all its brands and other assets could take a year.

Mark Pratt, a commercial real estate appraiser in Bartholomew County, has said he’d be surprised if the 52-year-old Dolly Madison plant draws baking industry suitors because it’s so old and “functionally obsolete.” The local plant made doughnuts and sweet rolls, not Twinkies, Ding Dongs or other better-known Hostess brands.

Still, Duncan said he believes the local plant has value because it has an industrial “band oven” that can run multiple product lines at the same time.

“It can run brownies, cookies, pecan pies and coconut pies in foil, even tortillas,” Duncan said. “We also have two wrappers (to package merchandise) that are worth probably $2 million for the both of them.”

Next steps

The Associated Press reported Wednesday that Hostess will send out termination notices to its employees Wednesday.

“Those employees now need to look for work,” CEO Gregory Rayburn said in the AP report.

Hostess’ wind-down plan envisions no more than 28 employees staying on the payroll for four weeks at each of its plants with even fewer people on hand three months from now. The small crew would be called upon to clean and pack equipment, dispose of waste, collect and secure vehicles, and get leased equipment ready for pickup by owners, Hostess said in a court filing.

Duncan said no union members are working at the shuttered Dolly Madison plant at this point, and he doesn’t expect any to be assigned in the days to come.

“The only people in there are company supervisors, and they let some of them go,” he said.

Duncan said workers will continue to strike against the bankrupt company, with from five to 15 staffing the picket lines at the National Road Dolly Madison plant for the time being.

“Local 132 members remain in good standing with the

international union through the first of the year, if not longer,” Duncan said, adding that members still qualify for strike pay of $15 per day.

Vacation pay

Hostess has not played fair with its workers, withdrawing up to two weeks’ worth of vacation pay from some employees’ final paychecks, Duncan


Other union members picketing Wednesday said they knew of fellow workers who lost $400 or more in vacation pay that had been deposited in their bank accounts, only to have Hostess take it back.

“It amounted to a week’s pay for some people, two weeks for others. (Hostess) is going to use that money to pay executive bonuses to its top people,” Duncan claimed.

Hostess said in its liquidation plan, filed in bankruptcy court last Friday, that it will need as much as $1.75 million to pay incentives and retention pay for 19 executives who are considered key to preparing the company for sale.

David Douglas, a shipping employee who worked 28 years at Dolly Madison, said he lost $875 from two of his credit union accounts this week when Hostess took back two weeks’ worth of vacation pay that he felt he had earned. Vacation time typically accrues a year in advance. He said the $875 already had been deposited as part of his final pay from Hostess when the plant closed earlier this month.

Douglas said he considered closing his accounts on Monday — and withdrawing all of his money — to avoid any such problems, but decided against it at the last minute. Hostess managed to deduct the funds Tuesday, he claimed.

“What they’re doing to people is unbelievable,” Douglas said. “They’ve taken so much from us.”

Lance Ignon, a spokesman for Hostess, said Wednesday that the basic principle regarding vacation pay in these circumstances is that employees cannot take future vacation from a company that has gone out of business. He said the company’s position is that the money was not owed to


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