Hostess Brands Inc. said Monday it will enter into confidential mediation today with the Bakery, Confectionary, Tobacco and Grain Millers Union.
Hostess, which is reorganizing under Chapter 11 bankruptcy protection, said the U.S. Bankruptcy Court for the Southern District of New York requested the mediation.
Irving, Texas-based Hostess Brands said a hearing scheduled Monday to consider its motion to liquidate the company and sell its assets was adjourned until 11 a.m. Wednesday.
It said production remained shut down.
Hostess Brands, whose brands include Twinkies and Wonder bread, filed a motion with the U.S. Bankruptcy Court on Friday seeking permission to close its business and sell its assets, including a 128-job bakery in North Jacksonville that made Hostess Wonder bread, Nature's Pride and Merita products. The company cited work stoppages by the striking bakers' union.
Hostess employs more than 18,000 workers nationwide. Those include 185 in Jacksonville employed at the bakery and eight area bakery outlets. It employs 340 around the state, according to a Worker Adjustment and Retraining Notification filed in May about potential layoffs.
The Reuters news service said the mediation with leaders of the striking union as well as lenders is an attempt to avert the liquidation.
Reuters said Hostess, its lenders and the bakers' union agreed to mediation at the urging of Bankruptcy Judge Robert Drain, who advised against a 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, according to Reuters.com
The 82-year-old Hostess Brands suspended operations at all of its 33 plants last week as it moved to start selling assets.
Reuters said Heather Lennox, a lawyer for Hostess Brands, said it would be difficult for the company to recover from the damage it sustained from the strike, even if an agreement was forthcoming. Yet after the hearing, Hostess Brands CEO Gregory Rayburn told reporters there was always a chance Hostess could be saved.
"I think we have to see what unfolds. My impression is that the judge wants to understand the parties' positions and some of their logic, but it doesn't change our financial position," Rayburn said.
According to Reuters, Rayburn said he was "happy to have the help," referring to Drain's urging of discussions after a breakdown of communication between Hostess Brands and the union. "Maybe the judge will help. But can I handicap how it's going to go? No way."
Reuters said Hostess faces several objections to its liquidation plan. 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.
Several unions also objected to the company's plans, saying they made "a mockery" of laws protecting collective bargaining agreements in bankruptcy.
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