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Mon Nov 19, 2012, 01:34 PM

Will Taxpayers Have to Pay Hostess Workers' Pensions? (rather than the Hedge Fund Investors)

Twinkies Defense is Private Equity's Pension Offense: Street Whispers

(TheStreet) -- The liquidation filing of Hostess Brands -- ....means that Americans may soon gorge themselves on the company's massive pension liabilities.

Hostess' liquidation -- just like the recent bankruptcies of well known companies like Friendly Ice Cream and Eddie Bauer -- raises the prospect that sophisticated private equity and distressed debt hedge fund investors are using courts to cast off unwanted pension obligations on U.S. taxpayers and put a losing investment back on the track.

Consider that also on Friday, the Pension Benefit Guaranty Corporation disclosed that its U.S. pension plan insurance deficit grew to a record $34 billion this year, the biggest shortfall in the federal agency's history. PBGC guarantees employee pension plans after a company goes belly up, securing the retirement of roughly 43 million U.S. workers.

snip

"PBGC may face for the first time the need for taxpayer funds," Gotbaum said on Friday.

So what is the tie-in between Hostess Brands liquidation and PBGC's dire financial outlook?

Were a bankruptcy judge to approve Hostess's plans, it's likely that most of the near 18,500 Hostess workers will lose their job and pensions with the company.

As part of the bankruptcy Hostess said it would terminate its pension, with roughly 2,300 employees in the company's single-employer plan falling under PBGC's guaranty......

hedge funds .....are using the bankruptcy process to shirk financial obligations on a federal agency, which increasingly looks to be supported by taxpayers, as a means to salvage or profit on an investment.....

The size of the near $1 billion union pension claim is likely, in part, because Hostess's hedge fund owners stopped contributing to the company's pension plan in Aug. 2011, as a result of bitter labor negotiations and deteriorating finances.


snip

http://www.thestreet.com/story/11771361/1/twinkies-defense-is-private-equitys-pension-offense-street-whispers.html

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Reply Will Taxpayers Have to Pay Hostess Workers' Pensions? (rather than the Hedge Fund Investors) (Original post)
amborin Nov 2012 OP
thelordofhell Nov 2012 #1
blm Nov 2012 #3
librechik Nov 2012 #2

Response to amborin (Original post)

Mon Nov 19, 2012, 01:42 PM

1. Yes

That's why they declared bankruptcy........to shed the unions and the pension plan

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Response to thelordofhell (Reply #1)

Mon Nov 19, 2012, 02:41 PM

3. Which should make them guilty of insurance fraud - it's being done knowing that insurance will cover

the loss that THEY caused to occur in order to line their pockets further.

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Response to amborin (Original post)

Mon Nov 19, 2012, 01:43 PM

2. yeah, that's a done deal.

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