Hostess Clarifies Mischaracterizations about Pension Fund Contributions

Hostess Brands Inc. has responded to news reports that suggested that the company inappropriately used pension money to fund its operations prior to filing bankruptcy in January 2012.

The company stated, it suspended contributions to its multi-employer pension plans in August 2011 because it faced a severe liquidity crisis and could no longer afford to maintain its pension contributions.

Over the course of several decades, various labor bargaining units for Hostess Brands' employees negotiated the right to convert portions of their future wage increases to pension contributions, according to the release. Once the bargaining units exercised these rights, such future amounts became permanent pension contributions that were separate and distinct from wages.

Hostess further reported that at no time were these pension contributions paid as wages, so no funds were ever "deducted from paychecks," as one news outlet erroneously reported. Hostess Brands has at all times continued to pay its union employees' current wages in full compliance with its collective bargaining agreements.

The pension plans may assert and have asserted claims in Hostess' bankruptcy cases for missed pre-petition and post-petition pension contributions.

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