Hostess Diverted Pension Money to Run Business
Bakers union was fuming over move
By Neal Colgrass, Newser Staff
Posted Dec 10, 2012 6:07 PM CST
A Hostess Twinkies sign is shown at the Utah Hostess plant in Ogden, Utah, in this Nov. 15, 2012 file photo.    (AP Photo/Rick Bowmer, File)

(Newser) – For months, Hostess diverted funds intended for employee pensions and used that money to help run the sagging business, the Wall Street Journal reports. It's not clear how much workers lost, and experts say it probably wasn't illegal, but Hostess CEO Gregory Rayburn admitted it was a "terrible" thing. "I think it's like a lot of things in this case," he said. "It's not a good situation to have." The move affected bakers union employees—not Teamsters—because only the former contributed from their wages to pension funds.

But how much bakers lost is unclear, because retirees at Hostess are paid by a "multiemployer pension plan" that's funded by several companies in the business. Jeffrey Freund, a lawyer for the union, said Hostess missed $22.1 million in payments during the five months preceding the company's bankruptcy filing in January, and another $3 million to $4 million per month until Hostess and the union failed to reach an agreement. "The company's cessation of making pension contributions was a critical component of the bakers' decision" to go on strike, said Freund.

More From Newser
My Take on This Story
To report an error on this story,
notify our editors.
Hostess Spent Money Intended for Worker Pensions is...
12%
5%
1%
59%
8%
15%
Show results without voting
You Might Like
Comments
Showing 3 of 29 comments
PadrePio
Dec 11, 2012 9:13 AM CST
This sounds like a sweet deal for the job creators at this company. Hell loot the pension fund and give yourself a big bonus. Yes capitalism at work.
realtruth
Dec 11, 2012 7:32 AM CST
Yea for the Unions.. GooOOOOH Unions..
right2dave
Dec 11, 2012 6:34 AM CST
Blood suckers!