Three Strikes and You’re Out

By Larry Teren

This is not about baseball. Instead, it’s about what happens in the aftermath when a company closes down because of repeated strikes by workers.

Recently, Hostess Corporation threw in the towel after attempts to reconcile with the various striking unions failed. Regardless of whom you blame or whether it is a joint effort, it ends up being another notch in the ongoing Great Recession portfolio of sad stories.

If this were a movie, it might end after the Bankruptcy Court judge bangs on his gavel giving permission to the Hostess owners to close up shop. The screen credits roll accompanied by a musical dirge. It gets you thinking about whether lessons can be learned on how to prevent this from happening again in the future. But, stop the credits rolling. It doesn’t just end like that. Instead, off camera much more goes on and on that makes a bad situation worse.

To wit,

All employees are ordered to immediately return any and all company property that they have in their possession. This includes laptops and other mobile devices. They cannot purchase the laptops to keep because Hostess does not have the money to ensure that all company-related data can be wiped clean off the hard drive. Nor can they allow them to use software that was licensed to the company as it is non-transferable. What happens to these laptops after the company is finally liquidated? To be determined.

Cell phone numbers (not the phones) can be transferred from company to personal account as long as the user stays with the same provider. Hostess does not have the money to pay for contract termination fees when the phone number is switched to a new provider. This action has to be done by a certain date or it no longer matters because the accounts will be otherwise closed.

Employees do not get paid for unused sick time nor vacation time coming to them. The lenders in the Bankruptcy Court agreement are not giving permission for these- only for wages earned through the date of termination.

Employees vested 401k plans are protected and may eventually be allowed to rollover to different plans. Other benefits are in question except that those on the company’s medical plan are entitled to COBRA as it is made available. However, those who are on union-sponsored plans are at the jurisdiction of the union as Hostess has stopped making contributions to those plans.

The company is not taking back unused stock from customer’s retail stores. All new customer orders are canceled. Advertising reimbursement and rebates will not be honored. Monies received for selling existing stock must still be remitted to Hostess or face legal action.

All supplier orders are canceled. Any that make it to the delivery docks will be refused or returned. It is unknown for now if vendor’s invoices will be paid and at what percentage. This will become better known when the lenders eventually get paid for the sale of patents and brand names.

Hostess could not come to agreement with a union that covered 18,000 out of the more than 30,000 workers. The bankruptcy court judge did not say who was the baby and who was the bath water.

*** information taken from Hostess website

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