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
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Author: George McGowan
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Author: George McGowan
How to Effectively Use Contracts to Manage Risk
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Author: George McGowan
Understanding Portability for Estate and Gift Tax
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Author: Marc J. Comer
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
Author: Marc J. Comer
How Can Trusts Be Used in Business Succession?
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Author: George McGowan
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.