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
Business Mediation: An Overview and Practical Tips
Business mediation is a confidential, voluntary process in which a neutral third party helps companies negotiate a resolution to a commercial dispute without going to trial. Because working with a mediator is very different from litigating in the courtroom, it is important to understand how commercial mediation works, when it makes sense for your dispute, […]
Author: Paul Grossman
Top 5 Causes Leading to Construction Defect Litigation
The five most common causes of construction defect litigation are design defects, substandard materials, workmanship defects, code violations, and subsurface defects. Because these flaws can compromise a building’s integrity, functionality, or safety, they frequently lead to disputes involving multiple parties and high financial stakes. Key takeaways: What is Construction Defect Litigation? Construction litigation is complex, […]
Author: Paul Grossman
How to Protect Your New Jersey Business When Going through a Divorce
The most effective ways to protect your business in a divorce are put in place before one begins: a prenuptial or postnuptial agreement, clean separation of business and personal finances, and divorce contingencies built into your operating or buy-sell agreements. If divorce is already underway, the priorities shift to establishing how the business is classified […]
Author: Jay McDaniel
10 Common Issues in Franchise Disputes
The most common franchise disputes involve breach of contract, franchise termination and non-renewal, intellectual property rights, territorial encroachment, royalty and fee payments, franchisor support obligations, and violations of state franchise laws such as the New Jersey Franchise Practices Act. Franchisors and franchisees can often resolve these conflicts by providing written notice detailing the dispute and […]
Author: Paul Grossman
Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together
New Jersey businesses must manage legal and reputational risk together because modern disputes play out on two fronts at once: the legal proceeding itself and the court of public opinion, where customers, employees, investors, and business partners often reach conclusions long before a judge or jury has had the opportunity to evaluate the facts. Success […]
Author: Sean M. Pena
Eviction Is Not Always the End: Understanding Post-Possession Rent Claims in New Jersey and New York
No. An eviction does not automatically end a tenant’s obligation to pay rent. Post-eviction rent claims are common because recovering possession resolves who has the right to occupy the premises, but it does not extinguish the tenant’s contractual obligations under the lease. Whether unpaid or future rent remains owed depends on three factors: the lease’s […]
Author: Donald M. Pepe
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.