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
Legal Issues Before Bringing on Investors
Bringing on outside investors can provide the capital and strategic support a business needs to grow. However, raising capital also introduces important legal, financial, and operational considerations. Before bringing on investors, businesses should address key legal issues to reduce risk, streamline investor due diligence, and position the company for long-term success. Early preparation signals that […]
Author: Dan Brecher
SECURE 2.0 RMD Planning Strategies
How the Updated Law Shapes Retirement and Estate Planning The SECURE 2.0 Act of 2022 materially reshapes the required minimum distribution (RMD) landscape, extending tax deferral opportunities while accelerating distribution requirements for many beneficiaries. For high-net-worth individuals and families, these changes are not merely technical. They require a reassessment of retirement income strategies, beneficiary planning, […]
Author: Marc J. Comer
Buying Commercial Property in New Jersey: Legal Guide for Small Businesses
Small businesses considering buying commercial property in New Jersey must evaluate a range of legal, financial, and operational factors. While ownership can offer long-term value and control, it also introduces significant risks if not properly structured. This guide outlines key considerations to help New Jersey business owners make informed decisions, minimize legal exposure, and successfully […]
Author: Robert L. Baker, Jr.
The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities
On January 28, 2026, staff of the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how existing federal securities laws apply to tokenized securities. The SEC’s “Statement on Tokenized Securities” does not establish new law, but it does provide greater clarity on the […]
Author: Dan Brecher
Common Legal Mistakes NYC and New Jersey Business Owners Make
Operating a business in the New Jersey and New York City metropolitan region offers incredible opportunities, but it also requires navigating a dense and highly regulated legal environment. From entity formation to regulatory compliance, seemingly minor legal oversights can expose business owners to significant risk. In our work with businesses throughout the region, our attorneys […]
Author: Dan Brecher
What Founders Can Learn From Start-up Suits
High-profile founder litigation is more than just a media spectacle. For startup founders, these cases underscore the legal and structural risks that can arise when rapid growth outpaces formal oversight. While launching a new company can be both an exciting and deeply rewarding endeavor, founders must be mindful that it also comes with significant risks. […]
Author: Dan Brecher
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.