Hostess Judge Comments on Mediation Agreement

Hostess and the bakers' union have agreed to mediation, as we reported. Here's part of what the bankruptcy judge said to them, calling it their last chance to avoid liquidation.

Hostess Bankruptcy Judge Suggests Mediation has the judge's comments and reason for mediation.

"A bankruptcy judge Monday asked whether he should preside over mediation between Hostess Brands Inc. and its striking union to avoid pulling the plug on the baker of Ho Hos, Twinkies and Wonder Bread.

At a hearing on Hostess's request to begin the process of shutting down its business, Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., asked attorneys representing Hostess and the Bakery, Confectionery, Tobacco Workers and Grain Millers International union whether mediation could help the two resolve their issues and avoid the loss of more than 18,000 jobs.

"To me not to have gone through that step leaves a huge question mark over this case, which I think—I may be wrong—but I think will only be answered in litigation. And that's no one's desired outcome," the judge said.

Judge Drain called a brief recess of Monday's hearing for Hostess and the bakers union to consider possible mediation.

At the start of the hearing, Hostess attorney Heather Lennox told Judge Drain that the strike the Bakers union launched Nov. 9 to protest labor concessions hurt the company's finances beyond repair.

Judge Drain acknowledged the company took a "significant economic hit" as a result of the strike but asked whether liquidation was the right path to take. "Moving to a liquidation is also a significant economic hit, and I think that many people, myself included, have serious questions as to the logic behind the decision to strike and a concern that it may be as a result of differences as far as information and goals," the judge said. Such differences "might be better worked out with a neutral third party in private as opposed to raising these issues in public."

The judge offered to serve as mediator but acknowledged that mediation would work only if both sides were willing to commit their best efforts.

"I'm also strongly suggesting that the parties should be willing to do it," he said. "I'm giving the union, as well as the debtors and their lenders, the last chance.""

SUMMING UP

Great move by the bankruptcy judge.

Now we'll wait and see what happens.

And keep our fingers crossed for all those employees.

Thanks. Bob.