Hostess, the makers of everyone’s favorite cream-filled, apocalyptic-survivable snacks, is in yet another sticky situation. Not only is the company bankrupt, it also covered operating expenses with money meant for their employees’ pensions.
While the company filed for bankruptcy early in the year, it was only just before Thanksgiving they publicly announced it was going under. In a less than savory move, the snack cake empire shirked responsibility for its bankruptcy, blaming the bakers’ union strike that began when workers refused to take another pay cut. As a result of their liquidation of operations, over 18,000 workers are now jobless.
When Hostess filed for bankruptcy, the judge granted them permission to pay $1.8 million in bonuses to 19 executives. They instead used the money for “company operations.”
Ambiguous? Yes. Dishonest? Yes. Illegal? Maybe not.
Even though the baker pension is missing over $22 million, there is a possibility it’s not illegal because the money didn’t come from employees.
Hostess knows its ways around the rules. PoliticusUSA reports that creditors have accused the company of “manipulating executive salaries in an attempt to get around bankruptcy laws.” In a short amount of time, then-CEO Brian Driscoll’s salary jumped from $750,000 to $2.5 million. Other executives as well received pay increases of between 35% and 80%.
In the process of expiring, Hostess shoved a bunch of money into the pockets of its elite executives and left nearly 20,000 factory workers without jobs.
As for the Twinkies? They’ll live to see another day. Considered “the ultimate comfort food” (or so St. John’s University professor Anthony Michael Sabino told the L.A. Times), another food company will likely adopt the immortal yellow cake.