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Mon Nov 19, 2012, 11:31 AM

Hostess wants pay executive bonuses while "liquidating"

Apparently the U.S. Trustee's Office, which oversees bankruptcy cases, is taking issue with that. If Hostess is forced into Ch. 7, there will be much more government oversight over how they wind down the business.

The U.S. trustee in the bankruptcy of Hostess Brands Inc. asked a judge to take control of the company’s liquidation away from the baker of Twinkies and Wonder bread.

U.S. Trustee Tracy Hope Davis today urged U.S. Bankruptcy Judge Robert D. Drain in White Plains, New York, to convert the case to a Chapter 7 from Chapter 11, based partly on the company’s intent to pay executive bonuses.

Hostess officials “have not demonstrated that the insider bonuses are permissible,” Davis wrote in a court filing.





http://www.bloomberg.com/news/2012-11-19/hostess-liquidation-needs-control-by-trustee-u-s-says.html

85 replies, 10589 views

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Reply Hostess wants pay executive bonuses while "liquidating" (Original post)
DirkGently Nov 2012 OP
Drale Nov 2012 #1
unblock Nov 2012 #2
DirkGently Nov 2012 #4
1StrongBlackMan Nov 2012 #10
jmowreader Nov 2012 #27
unblock Nov 2012 #37
jmowreader Nov 2012 #65
unblock Nov 2012 #66
quakerboy Nov 2012 #44
unblock Nov 2012 #48
quakerboy Nov 2012 #53
unblock Nov 2012 #59
Tigress DEM Nov 2012 #69
tclambert Nov 2012 #73
Morganfleeman Nov 2012 #85
ProgressiveProfessor Nov 2012 #3
DirkGently Nov 2012 #6
nc4bo Nov 2012 #5
Tigress DEM Nov 2012 #70
1StrongBlackMan Nov 2012 #7
Vincardog Nov 2012 #8
nc4bo Nov 2012 #9
DirkGently Nov 2012 #11
Demeter Nov 2012 #75
Vincardog Nov 2012 #79
Barack_America Nov 2012 #20
Tigress DEM Nov 2012 #71
FogerRox Nov 2012 #12
LiberalEsto Nov 2012 #13
awoke_in_2003 Nov 2012 #67
freshwest Nov 2012 #14
Travelman Nov 2012 #15
DirkGently Nov 2012 #16
Barack_America Nov 2012 #21
Travelman Nov 2012 #29
nashville_brook Nov 2012 #32
DirkGently Nov 2012 #38
Travelman Nov 2012 #41
DirkGently Nov 2012 #42
quakerboy Nov 2012 #43
WinniSkipper Nov 2012 #17
nashville_brook Nov 2012 #23
Travelman Nov 2012 #31
nashville_brook Nov 2012 #33
Travelman Nov 2012 #36
DirkGently Nov 2012 #40
Tigress DEM Nov 2012 #72
closeupready Nov 2012 #18
nashville_brook Nov 2012 #26
OnyxCollie Nov 2012 #19
Mnemosyne Nov 2012 #22
no_hypocrisy Nov 2012 #51
msongs Nov 2012 #24
barbtries Nov 2012 #25
liberal N proud Nov 2012 #28
DirkGently Nov 2012 #45
liberal N proud Nov 2012 #49
amborin Nov 2012 #30
AngryAmish Nov 2012 #34
DirkGently Nov 2012 #52
DirkGently Nov 2012 #54
Panasonic Nov 2012 #35
PD Turk Nov 2012 #39
Initech Nov 2012 #46
DirkGently Nov 2012 #47
daleanime Nov 2012 #84
Panasonic Nov 2012 #50
DirkGently Nov 2012 #55
Starry Messenger Nov 2012 #57
DirkGently Nov 2012 #61
Sekhmets Daughter Nov 2012 #56
DirkGently Nov 2012 #62
Sekhmets Daughter Nov 2012 #64
ck4829 Nov 2012 #58
JustABozoOnThisBus Nov 2012 #60
DirkGently Nov 2012 #63
Barack_America Nov 2012 #76
Canuckistanian Nov 2012 #68
jsr Nov 2012 #74
toddwv Nov 2012 #77
tjwash Nov 2012 #78
Yo_Mama_Been_Loggin Nov 2012 #80
CarmanK Nov 2012 #81
upi402 Nov 2012 #82
Quantess Nov 2012 #83

Response to DirkGently (Original post)

Mon Nov 19, 2012, 11:42 AM

1. Of course

why else would they want to liquidate the company instantly? So they can run away with as much cash as possible and go rinse and repeat at another company.

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 11:46 AM

2. this is actually typical; another rotten aspect of "free enterprise"

key officials of a dying business have little upside in staying. they have big financial incentives to get a new job with a new company with a bright future.

and creditors have a big incentive to keep these people there, even paying them silly bonuses, because the key people often know best how to liquidate the operations for the most money -- usually the difference is more than enough to cover the silly bonuses.

it's one of those situations, like price gouging, where if everyone acts in their own self-interest, just like they're "supposed to" in a free market, sometimes you get some pretty distasteful results.

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Response to unblock (Reply #2)

Mon Nov 19, 2012, 11:53 AM

4. We have no sense that a company is "for" the workers.

I have no problem with the concept that ownership reaps the rewards of a business enterprise, but the idea that the sole purpose is to enrich -- sometimes grotesquely -- a few people at the top, with zero regard to all the others actually necessary to conduct the enterprise, is ridiculous.

Worse in this case, where the company was bought out by venture capital that leveraged it to the rafters in the first place, then let it die a slow death while squeezing labor but preserving -- even at the very end -- big paydays for execs.

I wonder how big the proposed insider bonuses are?

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Response to DirkGently (Reply #4)

Mon Nov 19, 2012, 12:02 PM

10. I guess one day ...

people will recognize the connection between corporate buy-outs by hedge funds and wage/benefits cuts, followed by corporate insolvency.

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Response to unblock (Reply #2)

Mon Nov 19, 2012, 01:38 PM

27. I don't know that the management would be that much help here

What you have in this case is two evergreen brands with very stale product lines - when was the last time Hostess created anything new? - a good distribution system and a string of worn-out bakeries thanks to a string of private equity transactions. Maybe this is the deal that finally proves to America there's no upside to the LBO business.(How close did we come to putting one of those assholes in the White House?)

Whoever buys Hostess has one initial task: develop - not buy and put your brand on, but invent from scratch - a totally new baked good that no one has ever seen before and everyone will love. New ownership, and products you can only buy from them, will reinvigorate Hostess.

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Response to jmowreader (Reply #27)

Mon Nov 19, 2012, 02:54 PM

37. i would think more than likely they'll take the brands and make them elsewhere.

say, grupo bimbo making them in mexico with much cheaper labor.

they may or may not keep the "hostess" brand name -- it's the products and their names, like "twinkies" and "ding dongs" that have the real commercial value.

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Response to unblock (Reply #37)

Mon Nov 19, 2012, 09:26 PM

65. Grupo Bimbo has US-based bakeries. You know that, right?

Making the stuff in Mexico would introduce transportation costs that would eliminate any advantage gained by using cheaper labor. Hostess has 33 bakeries spread all over the US. Hostess also makes bread, which has to be delivered almost as soon as it's made...who would want to buy four-day-old bread?

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Response to jmowreader (Reply #65)

Mon Nov 19, 2012, 11:33 PM

66. lots of possibilities

aside from the recent possibility of renegotiating with the unions and keeping hostess alive, of course.

they could sell off the various brands to a number of different companies. the brands don't all have to go together. they could sell the twinkies and other preservative-laden foods to a company further away and sell the fresher stuff to someone close by, or who would continue to operate the existing plants.

can't say i know exactly how much extra transportation costs compare to savings from cheaper labor, so i don't know if mexico is economical or not. most likely it *is* economical at least for distribution in the southwest.

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Response to unblock (Reply #2)

Mon Nov 19, 2012, 03:24 PM

44. Seems like there is a way out of that

Key officials are on contracts. Lucrative ones that pay them good money, even if they choose to leave for no apparent reason or get fired. Or so most reports I have seen would seem to indicate.

Especially in the modern era of commonplace bankruptcy and failure, why wouldnt these contracts have a clause regarding bankruptcy/buyout of the company, basically they agree to stay on for the orderly transition of the company as long as their normal salary is paid?

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Response to quakerboy (Reply #44)

Mon Nov 19, 2012, 03:58 PM

48. in fact such contracts usually stipulate a bonus/retainer for this.

creditors are willing to pay to retain key people in an unwind, and key people are willing to take it.

so who is there to insist on them being required to continue working for only their normal salary?



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Response to unblock (Reply #48)

Mon Nov 19, 2012, 04:26 PM

53. That seems back asward

Why contract to pay out extra for failure?

Why not have it the other way, that failure costs them something, particularly if they jump ship as its going down.

Honestly, I think that we need to look at the way corporate compensation works. I dont know a lot about it, but i feel fairly certain that stockholders dont get all that much of a say. Might change the order a bit if anything over, say 300k/year per company employee had to be specifically approved by the stockholders(and any specific benefits that are not applied companywide), Or not, I don't know.

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Response to quakerboy (Reply #53)

Mon Nov 19, 2012, 06:03 PM

59. companies do often have vesting schedules to keep people there long term

but mostly this relates to options or restricted stock that presumably has little if any value in a failure scenario.


in terms of compensation, most companies have a compensation committee that overseas, at least at a high level, labor costs, particularly for upper management. members of the compensation committee are often some of the board directors and possibly some outside people as well. but the reality is that this is often an insular world in which the first guy is on the compensation committee determining the compensation of the second guy, who in turn is on the compensation committee for the first guy's company. or maybe the first guy's brother, or whatever.


really it comes down to sometimes the players all have incentives to do something that just plain stinks. this continues to happen unless someone somehow sets a standard that such things ought not happen and a company is shamed or fined if it does. this is the role of government or outside groups that shine a spotlight on such things.

sadly, we as a culture seem highly ineffective at this.

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Response to quakerboy (Reply #53)

Tue Nov 20, 2012, 02:25 AM

69. Exactly

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Response to unblock (Reply #2)

Tue Nov 20, 2012, 06:55 AM

73. They also want to cancel the pension plans.

Workers get laid off. Retirees lose their pensions. Stockholders get nothing. Creditors get pennies on the dollar. But a handful of executives get fat bonuses.

Oh, and very Romney-like, the holding company that owns Hostess "extracted the value" of the company over the past several years by loading it up with debt while transferring wealth to the holding company. (Now that they've sucked out all the creamy filling, they're throwing the rest away.)

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Response to unblock (Reply #2)

Wed Nov 21, 2012, 10:32 AM

85. This is correct

I STILL work at Lehman Brothers over 4 years later, helping to wind up the company. These bankruptcies are incredibly complex and usually the best people to see them through are the people that were there. And for the record, I was in a unit that had nothing to do with the crisis, but I've stuck around because the compensation makes it worthwhile, and frankly, I have far more personal time.

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 11:49 AM

3. I am curious to see what the stockholders are going to get from this

When it is far more profitable to liquidate rather than continue in business, where does the fiduciary duty lie?

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Response to ProgressiveProfessor (Reply #3)

Mon Nov 19, 2012, 11:56 AM

6. Zero, would be my guess, not counting the insiders.


They're in bankruptcy, so even in Ch. 11, they answer to creditors first. They have to justify payments to insiders, which apparently is the problem here. Stockholders are way down the priorities list. The "profit" would be in bonuses paid to executives over whatever ridiculous contracts they have in place.

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 11:54 AM

5. Too broke to continue business but doing well enough to pay bonuses. Sounds like banksters.



Sick.

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Response to nc4bo (Reply #5)

Tue Nov 20, 2012, 02:26 AM

70. Yep. Take the money and run. nt

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 11:58 AM

7. LOL ...

U.S. Bankruptcy Judge Robert D. Drain


Irony = Bankrupcty Judge named, "Bob D. Drain." Isn't that exactly what bankrupcty judges do?

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 11:59 AM

8. The workers should buy the brands at liquidation and continue to make them

in a co-op. Bring Democracy to the work space.

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Response to Vincardog (Reply #8)

Mon Nov 19, 2012, 12:00 PM

9. That thought flew through my brain too.

They'd probably do a much better job.

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Response to Vincardog (Reply #8)

Mon Nov 19, 2012, 12:03 PM

11. Love that idea. I remember a story about a


co-op group of bakers somewhere who were pulling down $70,000 per year because they ran and owned the whole thing themselves.

The problem, of course, would be generating the "capital" to buy the brand.

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Response to DirkGently (Reply #11)

Tue Nov 20, 2012, 07:18 AM

75. The workers Collect their pensions by collecting the means of production

and suddenly, all the fraud is removed from the system. Let the fraudsters inherit the debt.

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Response to Demeter (Reply #75)

Tue Nov 20, 2012, 01:08 PM

79. Bingo. Let the debt return to the fraudsters who manufactured it.

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Response to Vincardog (Reply #8)

Mon Nov 19, 2012, 01:10 PM

20. Occupy Hostess!

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Response to Barack_America (Reply #20)

Tue Nov 20, 2012, 02:27 AM

71. Ya know....

Except that the demise of Hostess probably will make America healthier overall.

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 12:09 PM

12. Hostess said it wants to pay as much as $1.75 million in incentive bonuses to 19 senior managers

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Response to FogerRox (Reply #12)

Mon Nov 19, 2012, 12:20 PM

13. And they deserve these bonuses for what?

For bankrupting the company?

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Response to LiberalEsto (Reply #13)

Tue Nov 20, 2012, 01:43 AM

67. How else do you expect to attract...

the best talent

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 12:24 PM

14. Hahaha! And more to come for the Banes of the world...

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 12:26 PM

15. About those banksters everyone is complaining about....

It would be a good idea to learn more about him:


Ripplewood is run by Tim Collins, 55, who's been at the center of other famed PE transactions. Known as a brilliant capitalist-philanthropist-networker, he's an eclectic character: a Democrat in an industry of Republicans; an Adirondack enthusiast dreaded by pheasant and fish; a board member at the Yale divinity and business schools; and someone who took a year at 31 to work at a refugee camp in the Sudan. Ripplewood orchestrated the $1.1 billion turnaround in 2000 of the Long-Term Credit Bank of Japan, which marked the first time that foreign interests controlled a Japanese bank. (Collins made the cover of Fortune Asia for it.) The bank was renamed Shinsei, and in 2004 it had a lucrative initial public stock offering. Far less fortunately, in 2007 Ripplewood acquired Reader's Digest -- and saw its $275 million investment vanish in Reader's Digest's bankruptcy filing in 2009. (Collins reportedly had visions of merging Reader's Digest with the magazine division of Time Warner (TWX), which owns Fortune.)

Ripplewood's foray into Hostess was partly enabled by Collins's connections in the Democratic Party. He wanted to explore deals with union-involved companies and sought the help of former congressman Gephardt, who in 2005 founded the Gephardt Group, an Atlanta consulting firm that provides "labor advisory services." In his 2004 presidential bid, Gephardt -- whose father was a Teamsters milk truck driver -- was endorsed by 21 of the largest U.S. labor unions; in 2003, Collins was one of 19 "founding members" of Gephardt's New York State leadership committee. (Today, Ripplewood and Hostess are listed online as major clients of Gephardt's consulting group, which is also an equity owner of Hostess.) Back when Hostess was coming out of the first bankruptcy, Gephardt's credibility with both Ripplewood and the Teamsters gave them each a little more room to break bread.

During this first bankruptcy, Hostess was almost sold. In 2007 it warded off a $580 million bid from its biggest competitor, Bimbo Bakeries USA. Bimbo Bakeries USA is part of Grupo Bimbo, the Mexican baking giant that owns such brands as Sara Lee, Entenmann's, Freihofer's, Arnold, Boboli, Ball Park Buns, and Thomas' English Muffins. Joining Bimbo in the bid were the union-friendly investment arm of supermarket titan Ron Burkle and the Teamsters themselves.

Hostess was able to exit bankruptcy in 2009 for three reasons. The first was Ripplewood's equity infusion of $130 million in return for control of the company (it currently owns about two-thirds of the equity). The second reason: substantial concessions by the two big unions. Annual labor cost savings to the company were about $110 million; thousands of union members lost their jobs. The third reason: Lenders agreed to stay in the game rather than drive Hostess into liquidation and take whatever pieces were left. The key lenders were Silver Point and Monarch. Both are hedge funds that specialize in investing in distressed companies -- whether you call them saviors or vultures depends on whether you're getting fed or getting eaten.




Be sure to read the whole thing. Bear in mind that this was written last January, long before the strike came about.



Before we run off half-cocked just condemning this as "Romney-style vulture capitalism," it's important to find out both who the players are and what was going on. Judging from this article, it looks to me like there were deep systemic problems at Hostess, owing largely to decades of mergers, buyouts, sell-offs, etc. Probably the biggest problem of all is that they didn't have A union, but they had a whole boatload of unions, and none of them could agree on anything, apparently. Everyone, labor and management, almost certainly would have benefited from consolidation into a single union for the whole company, be that the Teamsters or the bakers' union or whoever. They could have consolidated and streamlined that horrendous pension debt, they could have gotten labor costs aligned and uniform company-wide, they could have done things like get health benefits all under one umbrella, which would both be a savings for the company and usually a better deal for the membership (let's face it: you get a better deal when you've got 15,000 insureds than when you have 1000 or 5000).

This sure looks to me like there was an ernest attempt to save this company that failed. Maybe the company was doomed from the start, who knows. But I'm not seeing anyone walking away from this one with bags of money. So far as I can tell, everyone is losing: the investors, the management (who have been on $1/year salaries), and all of the labor. Looks like the only winner will be Bimbo Brands, assuming they buy the company (or just the branding) at fire sale prices.

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Response to Travelman (Reply #15)

Mon Nov 19, 2012, 12:46 PM

16. Wherever they started, it became a vulture capital looting.


BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.


In 2009 union members once again made concessions in order to help the company emerge from bankruptcy. Unions gave up $110 million in labor cost, and thousands of members lost their jobs. But other venture capitalist entered the picture, taking a chunk of Ripplewood’s ownership; making the future of Hostess even bleaker (Ripplewood later became a bigger shareholder by pumping more money into the company, but has now been relegated to a non-factor).


By late 2011 the company was in deep trouble again. In January of this year, Hostess, after having their creditors say no to help, once again asked unions for more concessions. But remembering the promises made and not kept in 2004 plus what they gave up in 2009, the union declined in an effort to force the venture capitalist to change their greedy ways. But they would not.

In February of this year the union found out that Hostess had asked the bankruptcy Judge to grant CEO Brian Driscoll $1.5 million in salary plus $2 million in cash incentives and long-term incentive compensation. The agreement also guaranteed Driscoll $1.95 million if Hostess liquidated. When the union chased down Driscoll and challenged him, the company backed away from the request but only after Driscoll left one month later.



http://www.cps-news.com/2012/11/18/the-demise-of-hostess-brands-was-at-the-hands-of-venture-capitalist-not-unions/

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Response to DirkGently (Reply #16)

Mon Nov 19, 2012, 01:15 PM

21. I have to agree with you.

It sounds like this Collins guy might be halfway decent, but he's swimming with sharks. The ending pretty much writes itself.

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Response to DirkGently (Reply #16)

Mon Nov 19, 2012, 01:53 PM

29. The problem with that is

that they failed to report that those raises didn't happen:


The disparity can impact morale. In the wake of recent criticism from creditors and unionized workers about managers' compensation, Hostess Brands announced last week it would roll back the pay raises it gave top managers in July 2011 prior to the company's filing for Chapter 11 this past January.



Instead, the top executives took one dollar salaries:


After seeing some backlash, Hostess Brands said it will chop the salaries of its four highest-paid managers to $1 until Dec. 31 or it emerges from Chapter 11 bankruptcy protection, The New York Post said. The company, which boosted salaries last summer as a retention strategy while it restructured, also plans to return junior executive salaries to lower levels.




Now maybe that's too little, too late, but the fact is that the claims about tripled salaries for top executives simply isn't true.

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Response to Travelman (Reply #29)

Mon Nov 19, 2012, 02:04 PM

32. sorry but, that doesn't mean what you think it means -- liquidation bonuses are not the same "salary

http://www.chicagotribune.com/business/breaking/chi-hostess-seeks-bonuses-for-key-manager-in-liquidation-filing-20121119,0,22735.story

The abuse of bonuses by Hostess liquidators is big news today b/c the Justice Dept has called foul.

(google is your friend)

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Response to Travelman (Reply #29)

Mon Nov 19, 2012, 03:02 PM

38. They did triple the salaries, backed off when caught. Now they want bonuses.


Which is why the U.S. Trustee's Office is involved. In Chapter 7, they'll get an individual trustee to oversee the liquidation, and the juicy executive bonuses will be reviewed.

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Response to DirkGently (Reply #38)

Mon Nov 19, 2012, 03:07 PM

41. The US Trustee's Office has been involved since the bankruptcy filing

A Trustee is automatically assigned in every bankruptcy.

Yes, they have requested bonuses. The only truly credible amount I have seen claimed is $1.75M spread around 19 executives, at least some of whom have been working for $1 this year. I don't think that's too terribly outrageous, frankly. The company is a billion dollars in debt; a mil and a quarter is not going to save the company.

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Response to Travelman (Reply #41)

Mon Nov 19, 2012, 03:19 PM

42. No. Ch. 7 trustees are completely different.

No trustee is automatically assigned in a Ch. 11.

In Ch. 11, you start out with the premise of the "Debtor in Possession" ('DIP' - haha). While the overall case falls under the jursidiction of the U.S. Trustee's Office under DOJ, you do NOT get an individual trustee in a Ch. 11 case unless one is specially appointed.

That's what big corps love about Ch. 11. They have broad discretion to present a "plan -- which can include a liquidation plan, but they generally keep control of the assets and day-to-day operations. This can work fine, as the idea is "reorganization." The company is allowed to operate under its normal ordinary course of business, under supervision of the bankruptcy court and creditor's committee. They can propose almost anything, if they can get it approved.

A Ch. 7 liquidation under a Ch. 7 trustee is not the same thing at all. Ch. 7 trustees take control over all "property of the estate" immediately. All business operations cease, all execs and the board are done. The trustee looks out for ONLY the creditors, and sets about liquidating in their best interests.

Edit:
All of which is to say, getting the case converted to Ch. 7 is a gigantic slap to the current management, and would be done on the basis that THEY CANNOT BE TRUSTED to wind up the corp. appropriately.

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Response to Travelman (Reply #29)

Mon Nov 19, 2012, 03:19 PM

43. You are wrong

Read your own articles.

"returned" "roll back"

They got the increased salaries from July 2011 until April 2012. Most of a year. They DID happen. They just reduced them when it became public knowledge and things started getting a little sticky.

So.. triple salary for most of a year, then working for a dollar a month for half a year. They still walked away with about 200% of what they would have normally had. While the company was going bankrupt.

And then they are trying to send out bonuses. On top of normal compensation. While the company goes bankrupt.

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Response to Travelman (Reply #15)

Mon Nov 19, 2012, 12:57 PM

17. Very interesting

 

This certainly gives a different perspective to the issue.

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Response to Travelman (Reply #15)

Mon Nov 19, 2012, 01:18 PM

23. Democrats are just as capable of participating in disaster capitalism as Repubs.

"when it comes to money other things such alliances, ideology and certainly politics are always, always, secondary."

The bottom line is that the company's pension fund was raided, and the PE/hedge fund side of negotiations has chosen to pay giant bonuses to management instead of keeping the company afloat.


http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles

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Response to nashville_brook (Reply #23)

Mon Nov 19, 2012, 01:58 PM

31. Where is the evidence of that?

Where is the proof of any pension fund being raided or any giant pay bonuses in lieu of keeping the company afloat?

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Response to Travelman (Reply #31)

Mon Nov 19, 2012, 02:04 PM

33. read the article -- information loves consumption :)

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Response to nashville_brook (Reply #33)

Mon Nov 19, 2012, 02:47 PM

36. There is no evidence in that article

to support your claim of raided pensions.

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Response to Travelman (Reply #31)

Mon Nov 19, 2012, 03:05 PM

40. They "borrowed" from the pension, then reneged.


of course.


In July of 2011 we received a letter from the company. It said that the $3+ per hour that we as a Union contribute to the pension was going to be 'borrowed' by the company until they could be profitable again. Then they would pay it all back. The Union was notified of this the same time and method as the individual members. No contact from the company to the Union on a national level.

This money will never be paid back. The company filed for bankruptcy and the judge ruled that the $3+ per hour was a debt the company couldn't repay. The Union continued to work despite this theft of our self-funded pension contributions for over a year. I consider this money stolen. No other word in the English language describes what they have done to this money.


http://www.dailykos.com/story/2012/11/18/1162786/-Inside-the-Hostess-Bankery

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Response to Travelman (Reply #15)

Tue Nov 20, 2012, 02:53 AM

72. YES, SOME effort was made to actually SAVE the Company by a bankster with a DEM style. Wonderful.

HOSTESS suffered in it's dealings with Unions because right now EVERY Rethug Governor has been trying to DESTROY collective bargaining and it's obvious that these unions made an effort to negotiate in good faith if they gave $110 million in concessions and couldn't protect all union jobs.

SO OK the ship is going down, but it still makes no sense at all to give $1.75 Million to 19 Senior Managers. THAT is bags of money split among a short list.

It's a bankruptcy. Investors and employees get the shaft and no fricken reward for managers who failed along with everyone else involved to find a way to really work together on solutions. If they'd kept talking the Unions wouldn't have had to walk out.






12. Hostess said it wants to pay as much as $1.75 million in incentive bonuses to 19 senior managers

View profile
http://www.bloomberg.com/news/2012-11-19/hostess-to-seek-court-approval-to-liquidate.html

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 01:04 PM

18. The law should state there is a 6 month clawback in Chap. 11

filings, just as it is with individual bankruptcy, in which there is a time period prior to the filing (something like 6 months) that if you make charges against accounts you are filing against, you may not include those charges.

But of course, since that would be closer to how our democracy was set up by the Founding Fathers, it won't even be on the radar.

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Response to closeupready (Reply #18)

Mon Nov 19, 2012, 01:36 PM

26. +1 -- great suggestion!

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 01:07 PM

19. Borders redux.

Borders, in bankruptcy, plans to pay $8.3 million in bonuses
Source: Bloomberg

Last Updated: March 25. 2011 2:02PM
Borders, in bankruptcy, plans to pay $8.3 million in bonuses
Linda Sandler and Tiffany Kary / Bloomberg News


Borders Group Inc., after filing for bankruptcy in February with plans to close about a third of its stores, said it plans to pay key employees as much as $8.3 million in incentives and retention bonuses.

The second-biggest U.S. bookstore chain asked a judge to approve its plan in a filing yesterday in U.S. Bankruptcy Court in New York, saying it historically compensated employees through incentives.

The main awards would be part of a program budgeted for as much as $7.1 million. The size would be calculated after the company files a reorganization plan or gets approval for a sale of the company, Borders said. The rest of the money is budgeted for retention bonuses, it said.

Under the incentive program, Borders President Michael Edwards, chief executive officer of the chain's parent company, Borders Inc., would get as much as $1.7 million in bonuses, according to the filing. "Award opportunities" under the plan would be 150 percent of historical levels for the company's incentives, it said.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4787325

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 01:16 PM

22. Aren't these the jerks that are cutting pensions through the bankruptcy? Asshats. nt

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Response to Mnemosyne (Reply #22)

Mon Nov 19, 2012, 04:23 PM

51. +1

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 01:21 PM

24. workers get romneyed once again nt

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 01:30 PM

25. man

those fucking greedmeisters.

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 01:42 PM

28. It's called win - win

They win if the company makes stuff, they win if it doesn't.

It is the new corporate model.

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Response to liberal N proud (Reply #28)

Mon Nov 19, 2012, 03:26 PM

45. That's the problem with this type of "investment."


They've figured out you can make money off of a struggling company without actually saving it.

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Response to DirkGently (Reply #45)

Mon Nov 19, 2012, 04:08 PM

49. And 100 year old brands are lost because of greed

Kodak, Hostess, other.

Energizer is going the same way. laying off 10% of its workforce, closing factories and discontinuing R&D.

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 01:56 PM

30. same with U.S. domestic airlines...CEOs get big chunk of the equity as part of the bankruptcy langua

language; happened w/ United, Delta, Northwest, and will probably occur again with American....

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 02:11 PM

34. And how does the US trustee get paid?

There is a lot of sausage making here.

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Response to AngryAmish (Reply #34)

Mon Nov 19, 2012, 04:24 PM

52. Your tax dollars at work.


A Ch. 7 trustee gets paid on a shifting scale of percentages of what gets liquidated and paid out to creditors. The U.S. Trustee's Office in general is part of the Department of Justice.

They don't really have an incentive to help anyone but creditors. BUT the wonderful BAPCPA (Bankruptcy Abuse and Consumer Protection Act) sponsored by Chuck Grassley and Bill McCollum complicated things considerably for debtors (not banks, naturally) and likely caused a big, expensive expansion of the U.S. Trustee's Office, as they now have additional duties of ensuring that individual debtors don't file a Ch. 7. if they aren't sufficiently destitute, and making sure they take a stupid consumer education course designed to inform them that you shouldn't borrow money you can't pay back.

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Response to DirkGently (Reply #52)


Response to DirkGently (Original post)

Mon Nov 19, 2012, 02:15 PM

35. The liquidation request is now irrevocably denied.

 

Workers come first. Pension fully paid.

Executives DEAD last. They should not be getting bonuses for running a long-time company to the ground.

Now, restart the factories, and executive compesantion will be linked to workers performance.

Yes, that means you have to deal with the union.

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 03:05 PM

39. We must

We must somehow learn how to say NO to these elite jackasses, the working class has suffered long enough paying for their excesses

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 03:44 PM

46. The criminal executive class. If I were in charge...

"Vultue capitalism" as it's called would be considered a class A federal felony as grand larceny and those that are caught practicing this nonsense would be punished by forfeiting their assets and would have to do minimum 20 years in jail with no parole. The only way we can fight back against these greedy scumbags is to take drastic measures to do so. I'm tired of this shit.

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Response to Initech (Reply #46)

Mon Nov 19, 2012, 03:54 PM

47. Amen. No reason to allow it that I can see.

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Response to DirkGently (Reply #47)

Wed Nov 21, 2012, 10:21 AM

84. Oh there's a good reason...

these folks write nice checks every couple of years.

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Response to Initech (Reply #46)

Mon Nov 19, 2012, 04:16 PM

50. and theft.

 

Don't forget theft. Embezzlement works too.

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 04:31 PM

55. UPDATE: Hostess will now mediate with baker's union


Have to think this has something to do with the proposed conversion to Ch. 7. Management no likey:



Hostess Brands Inc. agreed in court on Monday to enter private mediation with its lenders and leaders of a striking union to try to avert the liquidation of the maker of Twinkies snack cakes and Wonder Bread.

Hostess, its lenders and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), agreed to mediation at the urging of Bankruptcy Judge Robert Drain of the Southern District of New York, who preferred it to the more expensive, public hearing regarding the company's liquidation.

"My desire to do this is prompted primarily by the potential loss of over 18,000 jobs as well as my belief that there is a possibility to resolve this matter," Drain said.

The U.S. Trustee, an agent of the U.S. Department of Justice who oversees bankruptcy cases, said in court documents it is opposed to the wind-down plan because Hostess plans improper bonuses to company insiders.





http://www.chicagotribune.com/business/breaking/chi-judge-hostess-union-agree-to-mediation-20121119,0,2355592.story


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Response to DirkGently (Reply #55)

Mon Nov 19, 2012, 05:14 PM

57. Thank you for the update Dirk.

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Response to Starry Messenger (Reply #57)

Mon Nov 19, 2012, 06:21 PM

61. Interesting, no? Suddenly Hostess is not as "done" as indicated.

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 05:00 PM

56. CNBC has been talking about Hostess all afternnon....

Surprisingly, much less union bashing than I had expected. They just had a baker's union member on and asked him if he'd rather take less pay but still have a job. He explained that the company had been withholding a bit over $4.00 an hour from their pay checks and the money was supposed to go into their pension plans. Instead the company was keeping the money, "they've been stealing from us. You can't negotiate with people you can't trust and you can't trust people who steal from you." He is hoping another company will buy up Hostess and he said he might be willing to work there without a union.... The interviewers were Bill Griffeth and Michelle Caruso-Cabrera and I swear this is the first time I have ever seen her not sneering at the working class. She even chimed in at one point that the company had been loaded down with debt by the investors.

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Response to Sekhmets Daughter (Reply #56)

Mon Nov 19, 2012, 06:30 PM

62. Pension thievery. Another gift of the investor class.

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Response to DirkGently (Reply #62)

Mon Nov 19, 2012, 07:03 PM

64. Amazing isn't it?

I just can't get over the sheer nerve that it takes to steal from your employees. I had read that money hadn't been paid into the pension fund for almost 2 years...

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 05:31 PM

58. All the people griping about unions have suddenly fallen strangely silent. Weird.

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Response to ck4829 (Reply #58)

Mon Nov 19, 2012, 06:06 PM

60. well, except for the International Brotherhood of Banksters

... and United Vulture Capitalists

Who needs a union hall when you have country clubs?

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Response to DirkGently (Original post)

Mon Nov 19, 2012, 06:40 PM

63. UPDATE: A more "union-friendly" buyer?



Florida-based private equity firm Sun Capital Partners said it hoped to buy the company with a more union-friendly deal, according to Fortune.


http://www.latimes.com/business/money/la-fi-mo-twinkies-hostess-union-mediation-20121119,0,5350938.story


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Response to DirkGently (Reply #63)

Tue Nov 20, 2012, 08:18 AM

76. Sun Capital = Mark Leder = Host of "47%" fundraiser.

"Union friendly"? I'm skeptical.

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Response to DirkGently (Original post)

Tue Nov 20, 2012, 01:55 AM

68. Tell me. What is the downside of hiring cheaper, less experienced executives here?

Seriously, they'd be more motivated, willing to work their asses off for less and show a real love for the job while saving a lot of money for the creditors.

These older executives are just moochers, always wanting their "free stuff", without having to earn it.

I say, give it to the students fresh out of school.

Or better yet, import some new grads from India. They speak English, don't they?

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Response to DirkGently (Original post)

Tue Nov 20, 2012, 06:58 AM

74. Laying off people is hard work

It's back breaking hard work.

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Response to DirkGently (Original post)

Tue Nov 20, 2012, 08:48 AM

77. They did such a great job

trying to save the company from all those greedy, incompetent workers.

Pensions first. 75 years worth of pensions just like the USPS.

There should be a federal rider that says that executives who run their companies into the ground get NOTHING.

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Response to DirkGently (Original post)

Tue Nov 20, 2012, 08:52 AM

78. this is that pesky oversight that rmoney and the TP congress ran on getting rid of

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Response to DirkGently (Original post)

Wed Nov 21, 2012, 02:06 AM

81. WHY NOT THE UNION PURCHASE HOSTESS, keep the jobs in AM, fire management!

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Response to DirkGently (Original post)

Wed Nov 21, 2012, 02:07 AM

82. MSM all over this story?

uh NOPE!

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Response to DirkGently (Original post)

Wed Nov 21, 2012, 06:07 AM

83. I hope they lose.

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