Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Hostess Brands Inc. bankruptcy posed risk to other pensions
Author: Joel R. Glucksman
Date: March 7, 2014
Key Contacts
Back
When Hostess Brands Inc. filed for protection under chapter 11 of the bankruptcy law in 2012, it posed risk to other pensions and medical charges for its employees as one of the the driving reasons behind the filing. At the time, the company was involved in a struggle with workers’ unions over a new contract that would have cut wages and benefits. The union rejected the offer, and reported that the company stopped paying workers’ pensions in 2011.
Hostess’s bankruptcy filing caused significant concern among workers at another company, Ottenberg’s Bakery, a family owned company in Maryland, with which it shared a pension plan, according to Bloomberg Business. Under a multiemployer pension plan, pensions are paid into large investment pools shared among multiple employers. These plans are considered to be a lower risk than single employer plans, because even if one company fails, the pensions are guaranteed by other employers paying into the same pool.
About 10.4 million Americans’ retirement plans are tied to multiemployer pension plans, according to the news source, but after recent economic distress and deregulation, the funds face a combined shortfall of approximately $400 billion. As a result, many are near insolvency.
After the Hostess bankruptcy, Ottenberg’s Bakery was going to be stuck footing the bill for both companies’ employees – an untenable position. In an effort to rectify the situation, the U.S. government saved the benefits of Ottenberg’s employees last week by sacrificing the pensions of Hostess’ drivers, who will now get a reduced payout that the government will finance, reports Bloomberg.
In the 40 years that the Pension Benefit Guaranty Corp. has existed, this is only the third time that it has carved up a fund, according to the news source.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Author: Brian D. Spector
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Author: Christopher D. Warren
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
Author: Scott H. Novak
President Trump's Termination of Member Gwynne Wilcox
On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]
Author: Matthew F. Mimnaugh
Breach of Contract Explained: Types and Consequences
Breach of contract disputes are the most common type of business litigation. Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. Understanding when to file a breach of contract lawsuit and how long you have to sue for breach of contract is essential […]
Author: Brittany P. Tarabour
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide
Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]
Author: Christopher D. Warren
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.